Denmark Levies the World's First Nationwide Fat Tax

(iStockphoto)

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.


A.R.Yngve

Sometime, somewhere, someone is going to tax inactivity (a "Rump Tax"). I'm only half joking.

kris Johnson

Unfortunately if the fat tax has any effect it probably will be to increase obesity. As others have pointed out saturated fat is not the problem everyone thinks it is. A growing number of scientists and doctors are coming to understand the refined carbs, processed vegetable oils and excessive omega-6 oils are the real problems. I say this as a retired and reformed dietitian who now enjoys plenty of butterand whole raw milk.

Paardestaart

WTF??
Government should not engage in behaviour modification - at all. Government only ever interferes because it needs jobs to give out to faitful cronies, because it sees another opportunity of raising taxes and to strenghten it's grip on it's tiresome proles and underlings..
Anybody incidently who wants to save his family from the lard ogre should learn how to cook, and reinstall family meals at table.

carlos9900

I lived in Denmark and the US, and because there is universal healthcare in Denmark it makes sense. I eat healthier in Denmark, I think because of taxes. For example, in Denmark juice is cheaper than soda. Which is the opposite than in the US. Overall, in the US I tend to drink MUCH more soda than in Denmark.

Sebas

We shouldn't be concerned about reducing obesity rates, but about the justified price a person has to pay for healthcare. If you risk your health by eating a certain amount of saturated fat content, wouldn't be fair that you will pay your healthcare instead of other people?

mike donelly

But....saturated fat is good for you....

What a dumbass law.

Alejandro Vale

Leaving aside any moral judgements or human rights issues, wouldn't it be more effective to tax overweight directly? An overweight tax proportionate to the pounds in excess of every individual. Agents could get an exemption if they are able to prove that they are treating their disease or overweight with a physician.

Kirah

Great idea (MCDONALDS!!!!!!) this would be wonderful and reduce obesity