Hurrah – the Danes can show us why imposing a fat tax is not healthy for the economy

If Parekura trimmed down a bit, it would be easier to pull him out of this mire.


Dunno when greenies like Sue Kedgley first started squawking for a fat tax, but she was certainly banging on about it in 2004.

In a press released in August that year (here, Sue urged the Clark Government to investigate a ‘fat tax’.

She said it should start with soft drinks to tackle the growing problem of obesity, as proposed by Diabetes New Zealand and Fight the Obesity Epidemic, in combination with other measures.

“We need to look at more radical options, such as a ‘fat tax’ on soft drinks and free fruit and vegetables in schools, if we are to tackle the obesity epidemic in New Zealand.

“The Government’s failure to provide any new funding for its obesity strategy means that it amounts to little more than window dressing and will not begin to turn the tide on the obesity epidemic,” she said.

She did not mean we should tax people who happen to be fat, a splendid idea which would result – for example – in Parekura Hormoia and Jerry Brownlee paying more tax than Alf, who is cuddly rather than corpulent.

Then a year ago, roughly, the idea was given a boost by the news that Denmark had become the first country in the world to introduce a fat tax on food with a surcharge on foods high in saturated fat of 16 kroner ($NZ3.80) per kg of saturated fats in a product.

Fair to say, Health Minister Tony Ryall ruled out a fat tax for New Zealand, saying it would simply add to the burden on many families in tight economic times.

But as Whale Oil hooted yesterday (here)

Fat Tax’ in Denmark Is Repealed After Criticism – I said it wouldn’t work

How much influence Whale Oil might have had on the decision is open to conjecture, but The Economist (here) has confirmed –

The Danish government rescinds its unwieldy fat tax

Its report said –

FARMERS, retailers and shoppers whooped with joy this week when the government announced the abolition of one of its most hated taxes: a tariff on saturated fats, imposed just over a year ago. The tax was undoubtedly well intentioned. Higher prices for unhealthy foods would reduce consumption and improve public health; obesity levels and cardiovascular disease would fall; strains on health-care budgets would be eased.

Yet in practice, the world’s first fat tax proved to be a cumbersome chore with undesirable side effects. The tax’s advocates wanted to hit things like potato crisps and hot dogs, but it was applied also to high-end fare like speciality cheeses. One gourmet cheesemaker cut his range of products when his creamy Danish blue saw a price increase of 25%.
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Critics saw the tax as the worst excesses of the nanny state.

Bakers fretted over the fat content of cupcakes. Pig farmers said their famous bacon would cost more than imports. Independent butchers complained that they were unfairly disadvantaged: supermarkets could keep meat prices down by spreading the tax across other goods, but small butchers sold only meat. This meant higher prices and lower sales.

Besides the bother and cost of installing new systems to calculate the extra tax, retailers were also hit by a surge in cross-border shopping. Family jaunts to Germany or Sweden to stock up on beer, fizzy drinks, butter and sugary delights became a national pastime. One study found 48% of Danes doing some cross-border shopping. A report by the tax ministry put the 2012 value of these trips at DKr10.5 billion ($1.8 billion), a 10% rise on the previous year. Another bugbear was how the tax was applied to meat. It was imposed per carcass not per cut, which meant higher prices for lean sirloin steak as well as for fatty burgers.

Sure enough, not everybody is happy to see the fat tax go.

The Danish medical association is banging on about politicians putting the economy before public health.

They acknowledge the tax is a blunt instrument, but they insist one year was too short a time to be able to gauge its impact.

Gotta say it sure cut back on sales of the sorts of food that Alf relishes.

A study by researchers at Copenhagen University into the effect of the tax during its first three months found that sales of margarine, butter and cooking oil had fallen by 10-20% over the previous year. But these data, said sceptics said, were skewed by hoarding in the run-up to the legislation as well as by cross-border shopping in its wake. Unless and until more data emerge, the effectiveness of the world’s first fat tax will have been buried under its own controversy.

But, why did Denmark go for this tax in the first place?

The answer can be found here, in an item that notes Denmark’s obesity rate of 10% is traditionally below the average for OECD countries, but…

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.

Why a clever politician would want to do this is beyond Alf’s ken.

Among other things, this was bound to heap extra costs on taxpayers for looking after the pensions, health costs and so on of their population.

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