France Cancels Tax Hike on Palm Oil

Summary

The French Government has decided to scrap an addi­tional tax on palm oil for use in food prod­ucts, a move wel­comed by the Malaysian Palm Oil Council. The tax, ini­tially pro­posed in 2012 and dubbed the ​“Nutella tax,” was reduced sig­nif­i­cantly due to strong protests from Malaysia and Indonesia, the two largest pro­duc­ers of palm oil.

The French Government has decided to scrap any addi­tional tax on palm oil for use in food prod­ucts. The move was wel­comed by the Malaysian Palm Oil Council, which said that the addi­tional tax ​“would have put thou­sands of small farm­ers out of work.” The orga­ni­za­tion urged the French Government to drop ​“once and for all” what it viewed as an unfair tax cam­paign against palm oil.

Tax on palm oil has been an ongo­ing ques­tion first addressed in 2012 amid envi­ron­men­tal con­cerns and dis­cussed by the Senate and the National Assembly — the law­mak­ers respon­si­ble for the final deci­sion.

Dubbed the ​“Nutella tax” because of the French love of the Italian choco­late spread, the ini­tial plan applied to palm oil would have raised taxes from €100 per ton to €300 ($326) per year from 2017. It would have meant an increase to €500 per ton in 2018, 700 euros per ton in 2019 and €900 per ton in 2020.

However, strong protests from Malaysia and Indonesia — the two largest pro­duc­ers of palm oil — caused France’s National Assembly to approve the levy of a grad­ual sur­tax start­ing at €30 ($34) in 2017, €50 in 2018 and €90 in 2020, a con­sid­er­able reduc­tion from the ori­gin propo­si­tion.

Palm oil is one of the least taxed veg­etable oils in France. However, the new diver­sity bill in which the tax on palm oil was included was not approved by the National Assembly in June 2016 which meant that the addi­tional tax had been scrapped alto­gether. France’s Secretary of State told Parliament that there was some legal uncer­tainty con­cern­ing the law which focused on only one type of veg­etable oil.

The French daily pub­li­ca­tion Le Dauphine reported that it was a story of ​“a bat­tle of diplo­matic and com­mer­cial lob­by­ing.” The paper said that Indonesia threat­ened that it would not buy the pro­posed mil­i­tary Airbus A 400M if the bio­di­ver­sity law was adopted.

Indonesia’s defense min­is­ter told Reuters in May that the coun­try planned to buy some mil­i­tary trans­port air­craft. Minister Ryamizard Ryacudu said: ​“I have a plan to buy A400s from Europe … but just a small num­ber. There is no need to buy many.” Indeed, France’s econ­omy would suf­fer a blow should the threat be car­ried out.

Environmental pro­tec­tion and con­sumers groups world­wide remain con­cerned about the destruc­tion of forests and the neg­a­tive health impli­ca­tions of palm oil.