September 8th, 2011

Coca-Cola suspends French investment over pop tax

CBC News

Coca-Cola said it has suspended plans for a $23 million investment in France to protest a tax on sugary sodas that’s part of government efforts aimed at shrinking the country’s huge debts.

The investment in the factory in Pennes-Mirabeau in southern France is on hold pending parliament’s debate on the tax, Tristan Faradet, head of Coca-Cola Enterprise, which produces and markets the company’s drinks in France, said Thursday. France proposes to raise the price of sugary drinks, saying unchecked consumption favours weight gain.France proposes to raise the price of sugary drinks, saying unchecked consumption favours weight gain.

Faradet added that Coca-Cola is ready to participate in budget austerity efforts, but considers the tax unfair because it targets drinks that are “not harmful to health.”

The government says the tax will raise $165 million. It’s part of a bill aimed at reducing the deficit of the public health care system, itself a component of a series of spending cuts and tax increases being discussed in parliament this month.

France, like many rich countries, has seen a rise in obesity in recent years, especially among children.

“It is necessary to put the brakes on the development of obesity, which weakens the health of the people concerned and represents, over the long term, a large cost for the health care system,” the government’s proposal reads.

It proposes “to raise the price of sugary drinks, whose unchecked consumption favours weight gain.”

Coca-Cola is lobbying legislators and Health Ministry officials to drop the tax.

It’s not the only company to exert pressure on lawmakers. Leading French theme park owners successfully persuaded officials to drop a proposed tax hike on their parks as part of the new budget cutbacks.

Coca-Cola insisted that suspending the factory investment would not affect any of its 3,000 jobs in France. The company says it has invested $357 million in France in the past five years.

On the website for Coca-Cola’s France operations is a series of arguments against the tax, including one saying obesity is linked to several factors including limited physical activity.

“It is not linked to the consumption of a particular product, but depends on the global nutritional balance,” it says.

French legislator Daniel Garrigue, who has been pushing for years to get a soda tax approved, called it “shocking that Coca-Cola is coming to interfere in France’s internal politics.”

“It’s a type of pressure or interference that is not respectful of democracy,” he told the AP.

Budget Minister Valerie Pecresse had little patience for Coca-Cola’s concerns.

“A tax of one extra centime on cans of sugared drinks is not going to threaten Coca-Cola’s operations,” she said on BFM-TV. “The creation of this tax is motivated by considerations of public health.”

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