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France & the Nutella Tax – Crackpot Socialism at its best as bankruptcy looms ever closer

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- Tom Winnifrith

Under its super crackpot socialist loon of a New President Francois Hollande, France is going bust even more quickly than soon to be bankrupt Britain. As such, nothing the Froggies do should surprise you. In France government spending is already 56% of GDP (OECD average 46%) The debt to GDP ratio at the end of 2011 was 85.8% and with a whopping budget deficit it is rising fast. 90% is the point at which debt stifles growth – a point of no return. Pretty soon you get to 120% and you are Greece.

So faced with a country going bust and spending too much what does a Socialist President do? Yes, of course. He spends more. And he pays for it by a) borrowing, while he can and b) by imposing new taxes. And this brings us to the great Nutella tax. According to France 24, the latest wheeze from the loons comes in the form of an attempt to hike taxes by 300% on a key ingredient in Nutella. A bill to push through the tax was adopted by a Senate commission and heads to the National Assembly this week for review.

The key ingredient is palm oil which comprises about 20% of Nutella. So how do the Froggies justify this tax hike?

Apparently, they are doing it to be eco-friendly? Pardonnez Moi Monsieur socialist avec un tete plein de muesli, repetez vouz s’il vous plait? It seems that the widespread use of palm oil has also been criticised for leading to deforestation in countries like Indonesia and Malaysia.

No doubt the Froggies also reckon that it will encourage the people to eat more healthily.

Well here is what this actually means. If demand for palm oil is reduced that will hit commercial plantations across Asia and West Africa so depriving poor people of real, free market, unsubsidised jobs and income. But maybe the EU can just send out more foreign aid instead?

The cost of Nutella will go up as whoever produces this foul product passes on the hike. Middle class people do not use much Nutella anyway – we eat muesli and porridge for breakfast. Those Andrew Mitchell might describe as plebs, spread Nutella on anything. And so this will be a regressive tax. Like all “health taxes” it is the poor who get whacked the hardest which is odd as it is always socialists ( and Lib Dems) who are keenest on such taxes.

My guess is that the percentage of the cost of a jar of Nutella accounted for by raw material palm oil costs is (after everyone’s mark up) perhaps 5%. And so by imposing a 15% price raise and blaming the Government for the 300% Nutella tax the manufacturers will look like heroes but preserve margins. Poor folks will eat as much Nutella as before and just spend a bit less on turkey twizzlers or whatever.
And so to summarise the net effects.

1. Froggy politicians fiddle at the edges. Tough decisions about the fundamental issue (the State spending too much) are deferred – France is still going bust.

2. Working class/non-working class people eat as much Nutella as before but are worse off. They may eat fewer turkey twizzlers as a result. Their diet does not improve they are just poorer.

3. Some middle class realise how evil Nutella is and ditch it. They had generally healthy diets anyway so will still live to 90 demanding a full range of State benefits

4. A few jobs are lost in Africa and Asia. But the poor black people can celebrate that they are saying the environment as they either starve or, rather more probably, wait for the EU to increase its foreign budget to look after them. France and the rest of the EU inch a step closer to bankruptcy.

So it all makes perfect sense if you are a deluded lefty. It is only a matter of time before the Lib Dems, Harriet Harman, the BBC or the Guardian (or all four) calls for Britain to follow the enlightened lead of the Froggies on this critical issue of the day. Perhaps George Osborne might like to make a Nutella tax another “central” part of the Tory manifesto and we can all celebrate a beautiful political consensus?

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