Denmark Levies the World’s First Nationwide Fat Tax

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This week, Denmark begins a large-scale incentives trial of sorts by becoming the first country to impose a nationwide fat tax. From now on, foods in Denmark with saturated fat content above 2.3% will be taxed 16 Danish kroner ($2.87) per kilogram of saturated fat; which works out to a tax of about $1.28 per pound of saturated fat. The tax was reportedly preceded by weeks of Danes stocking up on items like butter, red meat and pizza.

The issue of taxing fatty or sugary foods (and more broadly, the effectiveness of behavioral nudges) has been a topic of repeated discussion on this blog. James McWilliams posted last December on studies which indicate that while taxing sugary sodas reduces consumption, others have shown soda taxes to be ineffective at reducing obesity rates. Proof, McWilliams argues, that taxing specific food items is ultimately ineffective, since consumers can simply substitute sugar from other non-soda sources.

Research also indicates that taxes on specific types of fatty foods need to be quite high before impacting our behavior. For example, the results of this 2007 study show that a 10% tax on dairy fat reduces fat consumption by less than one percentage point. Steve Sexton‘s post last month deriding the notion of mandated calorie counts fired up a lot of our readers. In it, he points to this Stanford study (ungated version here) that shows New York City’s calorie-count law to be fairly ineffective at reducing calorie consumption, at least when it comes to NYC Starbucks.

This all underpins what’s so interesting about the Denmark tax: instead of taxing a particular product, it casts a wide net around all saturated fats. Most importantly, it gets straight to the point: rather than gently reminding people of what they should (or shouldn’t) eat, it is a real fat tax.

But, why Denmark? The country’s obesity rate of 10% is traditionally below the average for OECD countries. Apparently, the Danish government isn’t satisfied with the life expectancy of its population, currently 78 years. A primary goal of the tax, reportedly, is to push that to 81. Which of course may carry its own economic ramifications.

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  1. Frank says:

    Sarah Kliff’s math is off by quite a bit- she did the conversion the wrong way around. The correct figure is $1.30 per pound of saturated fat. Google can do this calculation quite easily: query “$2.87/kg in $/lb”.

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  2. Marijn says:

    That math seems off…

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  3. BL1Y says:

    “taxing specific food items is ultimately ineffective, since consumers can simply substitute sugar from other non-soda sources”

    I don’t know if I buy this. When I buy soda it’s because I specifically want a soda.

    If the cost of a 20oz Coke at the checkout line went from $1.50 to $2.50, I probably wouldn’t buy it, and would save myself something like 240 calories. I wouldn’t instead pick up a bag of chips or candy.

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  4. jonathan says:

    I see this less as a stick for consumers than as an incentive for producers: get the saturated fat below 2.3% and you have a price advantage.

    Well-loved. Like or Dislike: Thumb up 24 Thumb down 0
  5. Ahmed Zghari says:

    This is an old story with new cloth.

    In the 1960s The Seven Countries Study highlighted that saturated fat was a major cause of heart attacks. The world went low fat mad and in the ensuing mayhem carbohydrates consumption went up and caused the obesity crisis Denmark is trying to solve now, with a reduction in fat.

    People that keep doing the same thing but expect a different result are often labelled insane. And those Great Danes are barking.

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    • Liz says:

      This is the biggest problem with the saturated fat tax. The evidence simply doesn’t support the hypothesis that saturated fat causes [obesity, heart disease, diabetes]. For anyone who is scientific-minded and who still believes that it does, or that the formula “cut calories and exercise” is a solution to obesity, I encourage you to read Gary Taubes’ book “Good Calories Bad Calories,” which is essentially an extended literature review on human diet.

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      • Ahmed says:

        If you are right, then someone really should tell the American Heart Association and the American Diabetes Association that their standing advice for people to reduce saturated fats and that is causes heart attacks is just plain wrong. In fact its worse than wrong, their advice, over the last few decades, has been based on an untested idea, a hypothesis.

        Wow, who funds these guys. Thank god for the internet, the truth always comes out in the end.

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    • James says:

      “…carbohydrates consumption went up and caused the obesity crisis…”

      An assertation that is, as far as I can tell, absolutely unsupported by data. Certainly it’s easy enough to find people (say in any group of marathon runners) who consume large amounts of carbohydrates yet aren’t obese.

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      • Corban Saezer says:

        Carbs and sedentary lifestyle may have caused the obesity crisis: whereas marathon runners can quickly burn all those carbs (and their bodies expect it to), everyone else’s bodies have to pay handling fees to store them. I smell an experiment!

        Research has to be sliced and diced properly, and many obesity studies do not do so: they may feed groups salted bacon and deli meats for the “red meat” factor. Well, given all the salt and nitrites, of course they’re going to look worse; rerun the experiment using a grainfed steak and let’s see what it returns.

        Failing to see these nuances would be much like saying a Rubik’s cube is orange simply because the facing side is orange, when the cube actually has six colors!

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      • James says:

        Or maybe the real key is the “and sedentary lifestyle”, and it doesn’t much matter whether you eat lots of carbs, or lots of saturated fats.

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      • Jan says:

        We’ve been spoon fed for years that we don’t exercise. This makes the obesity epidemic the individual’s fault. How can millions of people be at fault?? I wonder why people don’t ever “feel” like exercising?? In my experience people do what they want, no matter who’s telling them what. If they felt like exercising or walking or moving, they would. The entire world didn’t become couch potatoes over night. The carb laden diet that we’ve become accustomed is weighing us down in more ways than one. Our biology drives our behavior…not the other way around!! I cannot emphasis this enough!!

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      • Jan says:

        Hot debate…hmmm, no I don’t think so. Perhaps you’ve not done your research. Calories have to come from somewhere, and if you don’t get them by fat, you’ll get them by carbs. The excess consumption of carbs is whats been happening these last 30 years…right along with the obesity epidemic. Do read Gary Taubes, “A big fat lie” too, then read the newest research on diabetes and cholesterol. Get ready to be shocked.

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  6. Nanno says:

    $2.87 per kg of saturated fat, who cares? That’s about 3 cents per steak. (Meat) prices differ more from store to store.

    So how is a butcher supposed to know the saturated fat contents of each individually cut piece of meat? I think there trying to create more jobs for accountants rather than prevent obesity. Think of the butcher’s tax returns. Does he also has to pay the farmer or is it just a consumers tax? Lean-cows become more desirable, upside down world.

    On the upside, we pretty much all hate paying tax and being reminded when buying something with more than 2,3% saturated fat (pizza, steak, mayonnaise anyone?) that not only is it unhealthy (which you already know, except for Americans) but that you’re also paying more than one type of tax (VAT and this saturated fat tax). If that doesn’t take away your appetite ……. … .. .. .. it just turns out to be a ridicules tax.

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  7. Mike B says:

    Specific foods aren’t the problem, its the quality consumed that is. If I go out and eat pounds and pounds of fat free bread and pasts I’ll blow up like a balloon just the same as if I were eating lots of butter. Now certain fats can impact heart health specifically, but its total calories consumed that define one’s waistline.

    A better solution would be to simply charge fat people higher taxes/premiums as part of whatever national healthcare system they use in Denmark.

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    • Nanno says:

      Mike I think you’re right twice, however, you stated it as if it was one point. Quality of consumed product is, in my opinion, equally important but I think you meant to say quantity based on the next sentence.

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  8. PaulD says:

    How ironic, then, that one of the healthiest fats you can eat is not only saturated, but a trans-fat:

    http://www.sciencedaily.com/releases/2010/12/101220200000.htm

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