Denmark Imposes World’s First “Fat Tax”

October 2, 2011Personal Financeby EW News Desk Team

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Denmark became the first country in the world to introduce a “fat tax” on Saturday, when a new tax on foods that contain more than 2.3 percent saturated fat came into effect in the Scandinavian country.

The new tax, designed by the outgoing Danish Government as a public health measure against unhealthy eating habits, will add 16 kroner (US$2.87) for every kilogram of saturated fats in a product. 

This would mean that an average 250g pack of butter, for example, would see a price increase of around 2.20 kroner (US$0.394), while a packet of crisps could cost around US$0.124 extra.

The tax was approved by large majority in parliament in March this year as a move to help increase the average life expectancy of Danes. According to the outgoing conservative Danish government, the move could see the average life expectancy of Danes, currently below the OECD average of 79 years, increase by an average of 3 years over the next 10 years.

"Higher fees on sugar, fat and tobacco is an important step on the way toward a higher average life expectancy in Denmark," said health minister Jakob Axel Nielsen when he first introduced the idea in 2009, as quoted by the Press Association.
 

However, Denmark’s Confederation of Industries (DI) has warned that the new tax could prove to be difficult for producers, outlets and consumers.

"The way that this has been put together is an administrative nightmare, and I doubt whether it will give better health. It’s more just a tax," said DI foodstuffs spokeswoman Gitte Hestehave in an interview with the AFP.

Hestehave added that the costs of levying the tax would most likely be passed on to consumers as producers recalculated the cost of their goods.

"Products that include other products that include saturated fats also have to have new prices worked out. Imported goods require a declaration from the producers abroad on exactly how much saturated fat has been used in production," Hestehave said.

In the week prior to the new tax, Danish consumers were stocking up heavily on their favourite food products so as to avoid any immediate effects of a price increase.

"It has been a chaotic week with a lot of empty shelves. People have been filling their freezers," said Christian Jensen of an independent Copenhagen supermarket.

Copenhagen resident Mathias Buch Jensen added, in an interview with The Guardian, “You know, Danes are big fans of butter. We love fat.

“Knowing the Danes, it could have the opposite effect. Like naughty children, when they are told not to do something, they do it even more.”

Denmark, like some other European countries, already has higher fees on sugar, chocolates and soft drinks. According to the OECD, fewer than 10 percent of Danes are obese, compared to the European average of 15 percent.