Well Being

Denmark’s Fat Tax Hurt Business More Than Obesity Rates, So It’s Getting The Boot

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denmark fat tax butter
In October 2011, Denmark introduced a fat tax to tackle obesity, which seemed pretty progressive for a country with an obesity rate that, while serious, is still much lower than our own (13% in Denmark vs. 35% in the U.S.). But a year later, they're canning the tax altogether; it turns out it mostly just resulted in a lot of Danish people smuggling butter in from countries that sold it cheaper.

The tax basically added the equivalent of a $2.70 per kilo fee on saturated fats in a product–raising the price of a half-pound package of butter, for example, by about 37 cents. (And you thought Bloomberg's soda tax was bad.) But instead of encouraging Danes to buy healthier food, the tax mostly just hurt businesses, inadvertently drawing Danish shoppers to Germany for cheaper groceries.

Studies have indicated that taxes would have to increase the price of food somewhere on the order of 20% to influence significant diet changes, but it's unclear whether researchers have tested peoples' threshold for traveling across state borders for their favorite foods. (And anyone who's been to Scandinavia knows that butter isn't going to make an exit from the diet anytime soon.)

And, as people started heading out-of-country instead of towards healthier products, The Danish Tax Ministry was quick to realize that this wasn't going how they wanted it to. They announced in a statement over the weekend that they'd be rolling it back, explaining:

The fat tax and the extension of the chocolate tax, the so-called sugar tax, has been criticized for increasing prices for consumers, increasing companies’ administrative costs and putting Danish jobs at risk. At the same time it is believed that the fat tax has, to a lesser extent, contributed to Danes travelling across the border to make purchases. Against this background, the government and the (far-left) Red Green Party have agreed to abolish the fat tax and cancel the planned sugar tax.

So, what to do about obesity rates? Plenty of countries, states and cities are implementing taxes and fees to discourage consumption of everything from soda to specific types of junk food. Some regulations have proven effective (like Bloomberg's limits on trans-fats in New York City restaurants), but it's unclear what exactly makes the difference between successful taxes, and Denmark's fat tax fail.

Do you think taxes are a good way to curb obesity and health care costs?

Photo: flickr user mhaller1979