The Institute of Economic Affairs’ May 2013 Current Controversial Paper examines how the Danish ‘fat tax’ policy went from ‘unanimous parliamentary support to becoming an “unbearable burden” on the Danish people,’ written by journalist and researcher Christopher Snowdon. His study highlights important lessons for UK policymakers considering ‘health-related’ taxes on fatty and sugary foods.
Snowdon writes that the tax on saturated fat failed due to the ‘invariably negative’ economic effects it had. Many Danish jobs were cut as consumers simply went across the border to Sweden or Germany to shop for food, and at least 10% of fat tax revenues went to administrative costs. Furthermore, it is widely agreed that the tax only helped make ‘the poor poorer’.
At the same time, it did not alter Danes’ attitude towards unhealthy food as 80% of Danes admitted that they did not change their shopping habits at all.
In conclusion, the policy was ineffective, regressive and ‘one of the most criticised policies [the Danish government] has had in a long time,’ says Mett Gjerskov, minister for food, agriculture and fisheries. The Danish experiment can only be an example to the UK, and elsewhere, that the effect of such policies on calorie consumption and obesity is likely to be minimal.
The study is available here.
The key findings from the Danish fat tax and comments on Snowdon’s report are available here.