According to the Washington Post article, Denmark Introduces Fat Tax to Curb Unhealthy Habits, Improve Life Expectancy, 2 October, 2011, Denmark’s “fat tax” on foods such as butter and oil is intended to curb “unhealthy eating habits”, this is in addition to initiatives to tax other “unhealthy” products such as sugar and soft drinks. The Washington Post piece goes on to note, “The Nordic country introduced the tax Saturday, of 16 kroner ($2.90) per kilogram (2.2 pounds) of saturated fat in a product.”
In order to justify the tax Danish government officials cite the correlation between fat-heavy diets and cardiovascular disease and cancer. However, it’s worth noting that the tax will not only make the consumption of fat-heavy foods more expensive, but it will also increase production costs by taxing fats used in creating the products. According to the Washington Post it is estimated that simply garnering the information necessary to pay the tax, not including the tax itself, will cost Danish businesses US$28 million in the first year of the tax’s implementation.
As I noted recently, “Taxing fast food is a blunt instrument and apart from treating adults like children it diverts attention from the real elephant in the room, which is government’s insatiable appetite for raising revenue by any and every means possible. The really unhealthy appetite is to be found in the taxer and not those consumers of fast foods who are threatened with another undeserved so-called “sin” tax”.
Author: Jasson Urbach is an economist with the Free Market Foundation.