In this article, from the health section of the Spectator magazine website, the author explains how, one and a half year after its abolishment, pro fat tax voices are trying to rewrite history, claiming the Danish tax was more effective than previously thought.
In articles that appeared in the European Journal of Clinical Nutrition and the British Medical Journal, the authors provide numbers proving that sales of fatty products fell by 10 to 15 per cent figure as a result of the tax.
“This figure comes from a study that looked at sales of butter, margarine and cooking oils in the first three months of the tax’s existence. The study did indeed show a fall of 10 to 15 per cent in those early days but there is a simple explanation for this. Knowing that the tax was to be introduced on 1 October 2011, thrifty Danes stockpiled fatty products in advance”.
On long term dietary changes, the author points out that “the reality is the tax had little or no effect on dietary habits, obesity and health. It failed to do what it was supposed to do and so the Danes sensibly got rid of it”. On the contrary, its negative effects on the economy were real: looking back, “the tax on saturated fat led to inflation, cross-border shopping, job losses and huge administrative costs”, he adds.
The Spectator article refutes more pro tax claims about the Danish fat tax and can be read in full here.
On 23 March 2015, WHO Europe released a paper called “Using price policies to promote healthier diets“.
Although the paper acknowledges that broader effects of HFSS taxes, such as product substitution, the impact on health inequalities and on overall diet, should be very carefully taken in consideration for designing a tax, it largely supports fiscal measures and concludes that taxes can be effective. The saturated fat tax in Denmark, the sweets tax in Finland and the product health tax in Hungary and the tax on sugar and non sugar-sweetened beverages in France are among the examples reviewed and are described to have provoked reductions in consumption, among other positive effects.
However, WHO Europe has not included the latest findings of the study ‘Food taxes and their impact on competitiveness in the agri-food sector’, commissioned by the European Commission. It found that food taxes in general achieve a reduction in the consumption of the taxed products and as a result, consumers may instead purchase similar non-taxed or less heavily taxed items. It also shows that consumers may simply buy cheaper brands of the taxed products, thus potentially not lowering their consumption of the ingredient the tax aims to target (i.e. salt, sugar or fat). Equally, consumers may be able to buy other products with similar levels of sugar, salt or fat to those that are taxed. The full European Commission study can be downloaded here.
Taxing food and drink is regressive and places stress on the least well-off members of society who spend a greater percentage of their income on the weekly shop. Obesity is a complex problem, and cannot be attributed to just one product. Information and education, not tax, is the way to teach people how to eat balanced diets and lead healthy, active lifestyles.
The full WHO Europe report can be read here.
On 5 February 2015, the European Commission initiated a formal investigation procedure against Denmark’s so-called ‘fat tax’, which was introduced in 2011 and abolished in January 2013: the European Commission suspects it could be considered as illegal state aid.
The goal of the investigation would be to determine whether food producers who were not forced to add an extra fat tax on their products received illegal assistance.
The tax was levied on meat, dairies, oils and other foods with at least 2.3% of satured fat. The Commission argues that all products with saturated fats should have had the fat tax added.
When abolishing the tax, the government put forward it had created administrative burdens it created, a dramatic rise in border trade and uncertainty among consumers on the real costs of food products.
A full article from Euractiv on the investigation can be read here.
While a ‘fat tax’ is still being discussed in some European countries, the idea of it has faded in Italy, particularly as the Institut Économique Molinari (IEM) released its study showing the undesirable effects of a ‘fat tax’. According to the study, there were too many negative side-effects of a tax on saturated fat, and consumption levels did not alter much.
The whole article is available here.
Unprecedented move designed to boost jobs and growth
Denmark has announced the abolition of its soft drink tax in a historic move which rolls away legislation that has been in place since the 1930’s.
Removal of the tax, which is set to path the way for jobs and growth, will take place in two stages with a 50% reduction as of 1 July 2013, and full elimination as of 1 January 2014.
A pioneer of soft drinks taxation, with one of the highest excises on soft drinks in Europe, the Danish government made the announcement this week as part of an agreement on initiatives designed to stimulate favourable conditions for growth and employment in Denmark.
“This decision is the result of concerted efforts to highlight the negative impact of the tax,” said Niels Hald, secretary general of the Danish soft drinks association, Bryggeriforeningen. “In taking this step the Danish government acknowledged the regressive nature of the tax, its negative impact on regional jobs close to the borders and the adverse environmental consequences of border trade.”
The announcement on excise tax follows the removal of the fat-tax and the halting of the proposed sugar tax last year and clearly demonstrates that the cost and negative effects of such duties in terms of jobs and economic growth are higher than any expected benefit. The abolition of the excise tax is expected to recoup most of the 5000 jobs lost when Danish people went across the borders to Germany or Sweden for their beverage purchases.
The sound economic policy being followed by Denmark could be a good example to other European countries facing low growth and high unemployment.