The “fat tax” or ‘the law on duty on saturated fat in certain foods’ enacted an excise duty levied on the producer, importer or seller of foods containing more than 2.3% saturated fat, including meats, milk, oil and processed foods. The duty amounted to 16 DKK per kilo fat. The law was adopted by the previous centre-right government and it was implemented in October 2011, but abolished a year after by the present centre-left government as part of budget negotiations for 2013. The abolishment was announced in November 2012 and took effect on January 1st 2013.
The law was hugely unpopular among consumers, retailers, farmers and food companies and although marketed as such, it was not considered a public health policy. The general perception was that the tax was intended to raise revenue rather than improve public health, even though several other taxes are partly motivated by health concerns (e.g. excise duty on motor vehicles, spirits, tobacco products, chocolate products, ice cream and soft drinks). One of the reasons was that, for technical reasons, the size of the fat tax on each product was not directly associated with the product’s actual fat content, but was calculated through categories. Pork meat, for example, was one category, even though the fat content of different cuts day varies hugely.
The Danish Medical Association was in favour of the policy. The scientific evidence, however, for a direct link between saturated fat content in food and morbidity and mortality was concurrently being proven to be ambiguous (Astrup et al, 2011).
Although sales of margarine, butter, cooking oil and other products did fall, the policy came with considerable side effects. Companies were complaining about excess bureaucracy, increasing administrative costs and ultimately putting jobs at risk. In a small open economy such as the Danish one, the fat tax provided a considerable incentive for cross-border shopping in Sweden and especially Germany. Hence, its potential effect on public health was ultimately reduced as well as its revenue generating potential.
When the government abolished the ‘fat tax’, it simultaneously cancelled the plans for introducing a ‘sugar tax’ on foods with added sugar such as marmalade, sauces, dairy products and processed foods. The government explained that the ‘fat tax’ and the planned ‘sugar tax’ had been criticised for increasing prices for consumers, being a burden on Danish companies and putting Danish jobs at risk.