Denmark Ends Fat Tax (But Not Because It Didn’t Work)
Just over a year after Denmark passed what is thought to be the world’s first fat tax, the Danish government has announced it will eliminate the measure. The reason is not that the tax was unsuccessful at its goal of making people slimmer and healthier but for economic and political reasons. The tax was said to be especially onerous to small businesses; “maligned” is an oft-mentioned word in the arguments.
Authorities say that the tax inflated food prices and put Danish jobs at risk. Denmark’s center-left minority agreed to scrap the tax as part of the government’s budget negotiations, in a year when the country’s economic output and investments have declined. Even without taxes on fat and sugar, Denmark already had one of the highest tax burdens in the world.
Under the tax, which was introduced on October 1, 2011, foods containing over 2.3 percent saturated fat were subject to the measure, be they dairy, meat or processed foods such as butter, cheese, sausage and oil. Specifically, for every kilogram (2.2 pounds) of saturated fat in an item, 16 kroner ($2.70) were added to the price. As the BBC explains, the tax meant that a 250 gram pack of butter cost 2.20 kroner more.
While there is only limited evidence to suggest that the tax was significantly hurting Danes in the wallet, a number of Danes have been crossing the border to Germany (where prices are as much as 20 percent cheaper) or Sweden. Along with rescinding the fat tax, the ministry also said that it scrapping plans to introduce a sugar tax.
With 47 percent of Danes overweight and 13 percent obese, no word yet on precisely how the Danish government now hopes to address its citizens’ health issues.
Other countries including the UK, Switzerland and Germany have cited Denmark’s fat tax as a model, so the Danish government’s decision to end it is a setback in efforts to urge people to have healthier lifestyles via legislation. As the Guardian notes, France’s government has already instituted a tax on sodas and sugary drinks, is planning to quadruple taxes on products containing palm oil (causing a “big fat international row” over Nutella, 20 percent of which is made of palm oil) and is considering introducing a tax on beer, all with a view to promoting healthy lifestyles (and increasing tax revenues of course).
In Denmark, the fat tax did bring in about €170 million ($216 million) in revenue in 2012. Lawmakers say they will slightly raise income taxes and decrease personal tax deductions to offset any losses.
The jury is still out about how the likes of a fat tax, a soda tax and other “nanny state” measures can help us change our diets.
In the US, over two-thirds of adults in are obese and over one-third overweight and the rates for children are catching up. We are having our cake and eating it too but at what cost?
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