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Denmark cancels “fat tax” and shelves “sugar tax” because of threat of job losses

BMJ 2012; 345 doi: http://dx.doi.org/10.1136/bmj.e7889 (Published 21 November 2012) Cite this as: BMJ 2012;345:e7889
  1. Ned Stafford
  1. 1Hamburg

Denmark’s so called fat tax on foods high in saturated fats has been repealed by the Danish parliament only one year after being introduced.

The controversial tax, designed to improve the health of Danes by discouraging consumption of fatty foods, was opposed by farmers and food companies and was unpopular among consumers. Companies complained that the tax was a bureaucratic nightmare, increasing administrative costs and putting jobs at risk, and consumers in Denmark were making shopping trips to Germany and Sweden to avoid the tax.

The fat tax was levied on all foods containing more than 2.3% fat, including milk, butter, cheese, oil, and meats, as well as frozen pizzas and other processed foods. Specifically, the tax added 16 Danish krone (£1.70; €2.10; $2.70) per kilogram of saturated fat.

In announcing the repeal of the fat tax, the Danish tax ministry said it had also cancelled plans to introduce in January a sugar tax (on foods with added sugar, such as yogurt, marmalade, pickles, and ketchup). Denmark already taxes chocolate, soft drinks, and other sweets.

The ministry said in a statement: “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.”

Mette Wier, who was chair of health committee that had proposed the sugar tax and had supported the fat tax, told the BMJ that the decision to repeal the fat tax was made too quickly.

“There is already evidence that it works,” said Wier, who is executive director of the Danish Institute of Governmental Research. “The best thing to do would have been to evaluate the long term effects after a few years, and then decide.”

She said politicians were swayed by economic arguments rather than the potential health benefits, adding: “It was removed because of the economic crisis. Danish firms are under pressure and the politicians are worried that taxes—not only the fat tax—will do damage.”

Esben Tranholm Nielsen, a consultant at the Danish Agriculture and Food Council, which represents farmers and food companies, said that its analysis indicated that the continuation of the fat tax would have resulted in 1300 job losses in Denmark and that implementation of the sugar tax would have cost 1100 jobs. A separate study estimated annual administrative costs of the fat tax to be 161 million krone, he said.

The planned sugar tax would have levied a flat tax per kilogram of product regardless of the amount of added sugar, he notes, adding: “At the moment, it does not seem likely that we will see new [food] taxes.”

Wier, though, believes that at some point the Danish government will reconsider new food taxes designed to promote the health of Danes. “Taxes mean public finance, and they can—if they are well designed—regulate behaviour,” she said.

Notes

Cite this as: BMJ 2012;345:e7889