The tax on saturated fat was introduced as part of a tax review aimed at promoting renewable energy, protecting the environment, discouraging climate change, and improving health. Danish people were already pretty healthy, with low smoking rates and low obesity levels. They were also accustomed to their government using the tax system to achieve health goals, as there had been a tax on candy for nearly 90 years. Denmark was also the first government to ban trans-fats in 2003.
The introduction of the fat tax was hailed by health lobbyists around the world when it was introduced with almost unanimous parliamentary support. However, the tax was blamed for helping inflation rise to 4.7 per cent in a year in which real wages fell by 0.8 per cent and was said to place an unfair burden on lower-income households. While initial surveys seemed to show a reduction in the amount of fats purchased, this may have been a statistical aberration owing to the panic purchasing of affected foods in the period leading up to the tax’s introduction.
An article by the Institute of Economic Affairs (IEA) claimed the tax was a disaster, with negative economic effects and very little impact on the consumption of healthy foods. Many Danes simply bought cheaper brands or bought some of the foods across the border in neighbouring countries. The IEA suggests the tax cost 1300 Danish jobs and quotes surveys finding that only seven per cent of the population reduced the amount of butter, cream and cheese they bought and that 80 per cent of Danes did not change their shopping habits at all.
The IEA called the tax “highly regressive, economically inefficient and widely unpopular”. Health activists, however, claim that the fat tax did succeed in reducing the consumption of unhealthy foods and was abandoned largely because of lobbying by the food industry.