In Denmark, a new tax has gone into effect. All saturated fats in food in Denmark will be taxed in an effort to reduce consumption, which some call an ineffective effort.
The Danish ‘fat tax’
Over the weekend in Denmark, a new tax went into effect. The tax charges an additional 16 kroner (about $3 U.S.) per kilogram of saturated fat – about $6.27 per pound of pure saturated fat. The tax is levied on the basis of both the amount of saturated fat in a food and the amount of saturated fat used in cooking or preparing the food. On average, the tax will add 12 cents to a serving of potato chips, 40 cents to a single-patty hamburger and 39 cents to a pound of butter.
Concerns over regressive taxation
The Danish fat tax has run into extensive criticism about the way the tax is structured. First, imported foods are taxed only on the basis of how much saturated fat is in the food. Domestic products, however, are taxed on the basis of both saturated fat content and saturated fat used in preparation. This structure means imported foods could be less expensive than domestically produced foods. Secondly, saturated fat taxing may hit lower-income households more severely. Lower-income families spend disproportionately higher percentages of their income on food, and usually on more prepared foods. This means lower-income families will be paying more for their food, as a percentage of their total income, than higher-income families.
Effectiveness of a fat tax
In addition to questions about the fairness of the Danish fat tax, there is a very serious question about the effectiveness of the tax. In 2009, the New England Journal of Medicine studied the possible effectiveness of taxing sugar or fat in food. The results of the study were not encouraging:
“Such a tax results in less than a 1 percent reduction in average fat consumption,” the authors found. “To have a substantial effect, the tax rate would have to be quite high. For example, a 50 percent tax only lowers fat intake by 3 percent.”
However, all research into the effectiveness of content-based food taxes is purely theoretical. The Danish tax system will be the first real-world test of taxing a particular food element as a way to reduce or change consumption toward “healthier” options.
Washington Post: http://www.washingtonpost.com/blogs/ezra-klein/post/will-a-fat-tax-make-denmark-healthier/2011/10/04/gIQA3D5nKL_blog.html
New England Journal of Medicine: http://www.nejm.org/doi/full/10.1056/NEJMhpr0905723
Mother Nature Network: http://www.mnn.com/food/healthy-eating/stories/denmark-levies-worlds-first-fat-tax
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