Finnish herbal tea producers face unexpected tax hike under new soft drink levy

A new soft drink tax that took effect on 1 April has unexpectedly raised costs for Finnish herbal tea producers, who argue their products should be exempt like traditional tea and coffee, Yle reports.

Katja Misikangas, chair of the Finnish Nature Entrepreneurship Network and a Rovaniemi-based herbal tea producer, said the change came as a surprise just days before implementation. “This was completely out of the blue,” she told Yle, noting that many initially dismissed the news as an April Fools’ joke when it surfaced on social media.

The tax increase stems from a shift in calculation method—levies are now based on the volume of the prepared drink rather than the dry product’s weight. For a 20-bag pack of herbal tea, the tax jumps from a few cents to around €1, according to the Finnish Association of Health Product Retailers.

Exemption for small producers—but with bureaucracy Small-scale producers (under 70,000 litres annually, roughly 500 kg of herbal tea) are exempt but must register and report production volumes to tax authorities. “It’s extra work for us,” Misikangas said, adding that the tax also hampers growth potential. “Competing on price will be tough.”

Health guidance or revenue boost? Pia Kivimies, the legislative counsellor behind the reform, acknowledged the tax primarily aims to fill state coffers but includes a “health steering” element to discourage high-sugar products. However, the logic puzzles the herbal tea sector: while black tea, coffee, and cocoa are exempt, herbal infusions—made from plants like nettle, yarrow, or raspberry leaves—now face the levy.

Industry groups criticise the lack of consultation, though Kivimies noted the proposal was publicly available for comment. The changes also reflect adjustments demanded by the European Commission under state aid rules.

Government estimates suggested the tax would raise retail prices by about 4% on average, but the impact varies widely—some concentrated products could see tax hikes of “tens or even hundreds of percent,” according to the legislative proposal.