US warns Catalan government about proposed “Coca-Cola tax”

The tax on sugary beverages proposed by the government of Catalonia has mobilized the US Embassy in Spain. United States Ambassador Alan D. Solomont of Madrid met with Catalan regional premier Arthur Mas in Barcelona to discuss the potential impact on American beverage companies, primarily Coca-Cola and Pepsi. Solomont has stated that this levy would be detrimental for these US companies in Catalonia, considering the fact that Coca-Cola and Pepsi hold a combined 70 percent of the soda market. Neither the embassy nor sources surrounding Mas commented on the meeting’s conclusions, which were not publicized.

The Catalan government intends to raise about 30 million euros a year with this tax, which was drawn up by the Catalan Republican Left (ERC), which is the parliamentary partner of Mas’s ruling CiU nationalist bloc. The opposition to the levy by these US firms is not so much rooted in the price, but more so the assumption that sugary sodas are responsible for childhood obesity.

The Spanish soft drinks association ANFABRA is lobbying against the tax and US companies, mainly Coca-Cola and Pepsi, have mobilized all their resources. Solomont was in early February in Barcelona, where he unofficially met with Mas and expressed the complaints of the American companies. Mas, however, remained inflexible.

Frightening away investment

Jeff Galvin, press secretary of the US Embassy did not confirm the meeting with Mas nor its contents, although he admits that when Solomont travels to Barcelona, he tries to meet with the regional leader. Galvin stated that the United States takes a stand against “discriminatory taxes that could cause uncertainty or scare away investment."

That is the general sentiment of the message Solomont has shared with Mas and his Economy chief, Andreu Mas-Colell: that the tax would be largely detrimental for US companies and would give a negative image of the Catalan government.

ANFABRA has sent a report to Mas-Colell against the tax. Among other things, the association states that this tax "seriously damages the image of soft drinks. This is the worst kind of damage for any type of food production."

In the United States there are cities like New York that have passed rules against sugary drinks, but the companies do not want another battle of this type in Europe.