Denmark Scraps Controversial “Fat Tax” After a Year

By: EW News Desk Team   Date: 12 November 2012

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12 November 2012

Denmark has repealed the world’s first “fat tax”, a tax on foods which are high in saturated fat, after Copenhagen found that it had inflated food prices and put Danish jobs at risk.

Danish lawmakers have axed a controversial “fat tax” a year after its implementation, saying the measure was hurting local businesses and failed encourage healthier eating habits.

Introduced last October, the surcharge was levied at foods containing more than 2.3 percent in saturated fats and prices of products such as butter, oil, sausage and cream jumped as much as 9 percent immediately after the tax was enacted.

After the failed attempt to limit the population’s intake of fatty foods, the Danish tax ministry also said it was cancelling plans to introduce a tax on sugar, reported the AFP.

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In a statement, the Danish tax ministry said:

The fat tax and the extension of the chocolate tax – the so-called sugar tax – has been criticised for increasing prices for consumers, increasing companies’ administrative costs and putting Danish jobs at risk. At the same time it is believed that the fat tax has, to a lesser extent, contributed to Danes travelling across the border to make purchases.

While there is little evidence to suggest that the tax impacted consumers financially, it did spark a rise in the number of Danes crossing the border to Germany and Sweden, where food prices are approximately 20 percent lower.

However, the first scientific study of the effects of the levy, released by the University of Copenhagen today, found that during the first three months of the levy, Danes did purchase fewer fatty products, although there was speculation that this could have been due to hoarding prior to the tax coming into effect.

According to the Danish National Health and Medicines Authority, 47 percent of Danes are overweight and 13 percent are obese.

Related News: Overweight Workers Cost US Companies $113 Billion in Productivity Losses

Related Infographic: The Economics of Obesity

The fat tax had brought in an estimated 170 million euros ($216 million) in revenues and Danish lawmakers plan to slightly raise income taxes and reduce personal tax deductions to offset the lost revenue.

Denmark already has one of the highest tax rates in the world and it’s not uncommon for high-income earners to contribute more than 50 percent of their income in taxes. 

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