Denmark U-Turns On Fat Tax

by Ulrika Lomas, Tax-News.com, Brussels

06 September 2012

Only one year after its implementation, the Danish government is planning to scrap the “fat tax”. The reason why: reports show that it simply doesn't work.

Denmark is now likely to abolish the tax levied on saturated fats, as empirical evidence shows that its negative effects outweigh the benefits for the Danish Treasury. In particular, reports point to job losses in the food processing industry and Danes crossing the German border to buy cheaper products.

The proposals to scrap the fat tax have been included in the 2013 draft budget, which is currently under consideration by Parliament.

Under current law, Denmark is applying a tax of DKK16 (USD2.40) per kg of saturated fat on food items. This tax was introduced back in autumn 2011 to combat obesity and raise tax revenues.

Health organizations have criticized both the tax and its scrapping, arguing that it was not ambitious enough. They say that taxing junk food more while subsidizing healthy products would have been a better way to tackle the problem.