French parliament rejects new palm oil tax proposal

[PARIS] France's National Assembly on Thursday rejected the latest move to introduce an additional levy on palm oil, the widely used food and cosmetics ingredient that has been blamed for encouraging deforestation and posing health concerns.

Green party lawmakers in the lower house of parliament failed to win support from government or main opposition parties for an amendment to the 2017 budget bill that would have applied an extra tax of 300 euros (S$454.76) per tonne in 2017, that would have risen progressively to 900 euros in 2020 and be further increased each year from 2021.

Crude palm oil is quoted at between US$700 and US$750 a tonne on the European market. In France, the current tax on palm oil is 104 euros a tonne.

French politicians have made several attempts to create a special levy on palm oil, currently among the least taxed vegetable oils in France. Some food manufacturers have removed the ingredient and labelled products as being palm oil-free.

Palm oil is favoured by food and cosmetics manufacturers due to its relatively low cost and chemical properties - it is solid when cold - and top producing countries Indonesia and Malaysia have lobbied against possible tax increases in France.

Such proposals were previously dubbed a "Nutella tax" in the French media because of the popular spread made by Italian group Ferrero that uses palm oil as one of its main ingredients.

The French government has said it would propose by February a new scheme to harmonise taxes on vegetable oils and include an exemption for those that are sustainably produced.

Ferrero says all of the palm oil it uses is certified as sustainable.

REUTERS