In a declared effort to combat obesity and heart disease, Denmark has imposed what may be the world’s first “fat food tax” on foods with more than 2.3 percent saturated fat.
The tax, which went into effect on Saturday, October 1, will be imposed in the form of a surcharge of 16 kroner (approximately $2.89 at today’s exchange rate) per kilo (2.2 pounds) of saturated fats in a high-saturated fat product.
Foods such as butter, milk, cheese, pizza, oils, meats, and pre-cooked foods will be subject to the new tax.
“Higher fees on sugar, fat and tobacco is an important step on the way toward a higher average life expectancy in Denmark,” health minister Jakob Axel Nielsen said when he introduced the idea in 2009, according to The Associated Press, because “saturated fats can cause cardiovascular disease and cancer.”
Background; Danish Policies
This follows a series of policies enacted by the Danish government aimed at improving the health of Denmark’s people. In 2004, Denmark made it illegal for any food to have more than 2 percent trans fats. In July 2010, the country increased taxes on ice cream, chocolate and sweets by 25 percent. In addition, it also increased taxes on soft drinks, tobacco and alcohol products beyond the minimum levels established by the European Union, all as reported by ABC News and other sources.
Perhaps because of these policies, Denmark does not have a highly obese population, compared to the United States. According to statistics published by the World Health Organization, 17.1 percent of males and 15.4 percent of women in Denmark were considered obese in 2008. In the United States, however, about one-third of all adults (34 percent) and approximately 18 percent of children and adolescents age 2—19 years were obese in 2008, according to the National Health and Nutrition Examination Survey published in 2010 by the U.S. Centers for Disease Control (CDC).
Impact of the New Tax and Reactions to It
The new Danish tax on saturated fats will mean, for example, an increase in the price of a pack of 250 grammes of butter by 2.20 kroner to more than 18 kroner, according to the Associated Press. At today’s exchange rates, this translates to a price increase of about $0.40 for about a half pound pack of butter, to a total of about $3.25.
Nevertheless, even though this does not appear to be a very large price increase, according to reports by the Associated Press and others, before the tax went into effect on Saturday, Danes emptied grocery store shelves, hoarding high fat foods. “We have had to stock up with tonnes of butter and margarine in order to be able to supply outlets,” Soeren Joergensen of Arla Distribution told AFP.
“But actually I don’t think the tax will make that much difference. If people want to buy a cake, they will buy it. But right now they’re saving money,” he added.
There have been complaints about the tax from Denmark’s industry and business sector, however. Gitte Hestehave, a spokeswoman for the foodstuffs segment of Denmark’s Confederation of Industries (DI), told AFP that the costing system for imposition of the tax would create “an administrative nightmare” for producers, distributors and retailers.
“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,” she said, adding that the costs of levying the tax would be passed on to consumers, as reported by API.
A representative of the Danish Federation of Small and Medium-sized Enterprises, Jeppe Rosenmejer, says the European Union is currently studying the tax as there may be a competition issue. The Associated Press reports that while producers in Denmark have to pay the tax at source, for imported goods it is calculated by the distributor.
“This can mean that imported goods will be cheaper than domestically produced items,” Rosenmejer told Denmark’s Jyllands-Posten daily. As reported by the AP, a Danish producer will have to pay the tax on all of the saturated fat used, including for example what a product is fried in, he said. An importer may only be paying according to what is actually in the finished product.
“Hopefully the tax will be short-lived.” Rosenmejer said.
In what may appear to be an irony for American politicians and political pundits, it was Denmark’s right-wing government that decided on and imposed the new tax. That government was succeeded by a center-left administration in elections last month, and Denmark’s industry and business leaders appear to be placing their faith in this center-left administration in their efforts to repeal or modify the tax.
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