About a year ago Denmark enacted a tax on “fatty foods”, allegedly in response to the growing number of obese Danes. Here is how the tax worked.
…foods containing over 2.3 percent saturated fat were subject to the [tax], be they dairy, meat or processed foods such as butter, cheese, sausage and oil. Specifically, for every kilogram (2.2 pounds) of saturated fat in an item, 16 kroner ($2.70) were added to the price. As the BBC explains, the tax meant that a 250 gram pack of butter cost 2.20 kroner more.
But, the Danish people were not particularly happy with this tax, so they did what all people do when confronted with new taxes…they changed their behavior, but not as the government intended. In this case, Danes crossed the border to Germany or Sweden where prices were lower. This was good news for business in Germany and Sweden, but bad news for small business in Denmark. So the tax is now history.
And with it, the Danish lawmakers also decided to scrap their earlier decision (not yet implemented) to tax sugar.
But something else caught my eye.
The fat tax comes to an end after netting an estimated €170 million ($216 million) in 2012 in new revenue. Danish lawmakers will slightly raise income taxes and reduce personal tax deductions to offset the lost revenue.
So, cynic that I am, I wonder. Was the fat tax enacted to curb obesity, or simply to create a “feels good” way of increasing government revenue?