Fat tax News

Denmark Scraps The Fax Tax

Fat Tax On Food Products Removed In Denmark

Denmark was the first country to introduce a fat tax or surcharge on food that was saturated in fat. The fat tax was introduced in October 2011. A proposed tax on food with high sugar content (confections and beverages) was scheduled to become effective January 2013. The proposed new tax and fat tax was scrapped because the minority government was seeking cooperation from opposition parties for a 2013 budget deal. The Danish Tax Minister described the events as being “what is needed in the current economic situation”.

The fat tax was criticized for increasing consumer prices, increasing corporate administrative costs and putting Danish jobs at risk. Other opponents to the tax said that lower income households were disproportionately affected by higher costs of certain foods. Others against the tax pointed out to cross border shopping in neighbouring countries was disadvantage Danish retailers.

Prior to government repealing the fat tax, two respected economists from the University of Copenhagen showed that market demand for foods saturated in fat had dropped by 10 to 20 percent. The economists cautioned that it was too early to draw conclusions from the tax impact.

To make up for the lost fat tax revenue, the Danish government raised the basic tax rate paid by all taxpayers.

In Canada, the Ontario Medical Association proposed in October, that junk food be treated the same way as tobacco and should be slapped with higher taxes and graphic warning labels.