France's top constitutional body today approved a new tax on sugary drinks that aims to fight obesity while giving a boost to state coffers.
The Constitutional Council approved the new soda tax, announced in August as part of the government's fight against obesity and within the framework of a broader austerity programme, after it was passed in parliament last week.
The tax, which works out to a cent per can of drink, is expected to bring in €120m in state revenues.
The tax has been slammed by drinks firms including Coca-Cola, which in September said it was suspending a planned €17m investment at a plant in the south of France in "a symbolic protest against a tax that punishes our company and stigmatises our products."
France's Constitutional Court today also approved an increase in the reduced VAT on some goods and services from 5.5% to 7%. Introduced in 2009 as part of economic stimulus measures, the reduced rate saw VAT lowered from 19.6% for some businesses, including restaurants and hotels.
The French government has sought to reassure investors and maintain its triple-A credit rating with a series of austerity measures, including the announcement last month of €65 billion in savings by 2016, on top of the €12 billion deficit-cutting package announced in August.
France's government has said it needs to make €100 billion in savings to balance the budget by 2016.
