Waning Appetite for Anti-Obesity “Fat” Taxes
September 7, 2012
In recent years we have seen increasing calls for higher taxes on certain foods and drinks in the name of combating obesity. Certain academic institutions have made something of a crusade out of trying to implement higher taxes on (or even ban the sale of) everything from soda to trans-fats to your favorite salty snacks. The movement appeared to have made a large step forward last year when the government of Denmark implemented a new tax based on the amount of saturated fat a given food contains. As Time magazine reported in October 2011:
The tax, the first of its kind in the world, imposes a price hike based on formula of 16 krone per kilo of saturated fat on any food that contains more than 2.3% (which is how the tax on a 250-gram package of butter, which is 63% saturated fat, comes out to 2.5 krone). Given current Danish consumption — they eat a lot of butter and sausage in Denmark — that should amount to somewhere around 82 million kilos (180 million lbs) of fat subject to the tax.
Unfortunately for the health food crusaders, however, the Danish government began to smell something rotten in the implementation of the fat tax, and is now planning on repealing it as well as backing off of a previously planned sugar tax for 2013.
The Danish government has revealed plans to drop its tax on saturated fats, introduced in October 2011, and shelve plans to introduce a tax on sugar from January 2013.
The fat tax has been widely blamed for costing food manufacturing jobs and driving Danish consumers to cross the Danish/German border to stock up on tax-free foods.
Tax was applied at the rate of £1.70 (16 Krone) per kg of saturated fat on a range of food products including butter, milk, pizzas, oils, meats and pre-cooked foods.
From the beginning of next year the government had planned to tax sugar in products such as confectionery, yogurts and jams.
None of this should come as a surprise, of course, as the arguments against picking out specific food items for punitive taxation in the name of public health are well known. You can treat yourself to a satisfying overview of the topic by reading the analysis we published last Halloween by economist Scott Drenkard, titled Overreaching on Obesity: Governments Consider New Taxes on Soda and Candy.