The Nordic country on Saturday introduced the tax amounting to 16 kroner, or $2.90, per kilogram of saturated fat in a product.
Ole Linnet Juul, food director at Denmark’s Confederation of Industries, says the tax will increase the price of a burger by around $0.15 and raise the price of a small package of butter by around $0.40.
The tax was approved by large majority in a parliament in March as a move to help increase the average life expectancy of Danes.
Denmark, like some other European countries, already has higher fees on sugar, chocolates and soft drinks, but Linnet Juul says he believes the Nordic country is the first in the world to tax fatty foods.
‘Hamburger Law’
In September, Hungary introduced a new tax popularly known as the “Hamburger Law,” but that only involves higher taxes on soft drinks, pastries, salty snacks and food flavorings.
The outgoing conservative Danish government planned the fat tax as part of a goal to increase the average life expectancy of Danes, currently below the OECD (Organization of Economic Cooperation and Development) average at 79 years, by three years over the next 10 years.
“Higher fees on sugar, fat and tobacco is an important step on the way toward a higher average life expectancy in Denmark,” Health Minister Jakob Axel Nielsen said when he introduced the idea in 2009, because “saturated fats can cause cardiovascular disease and cancer.”
Linnet Juul says the tax mechanism is very complex, involving tax rates on the percentage of fat used in making a product rather than the percentage that is in the end-product.
As such, only the arrangements of how companies should handle the tax payments could cost Danish businesses about $28 million in the first year, he said.
Linnet Juul’s organization is pressuring lawmakers to simplify the tax, but said he was unsure what would happen when the new, center-right government took office.
Hoarding
A week earlier, consumers hoarded butter, pizza, meat and milk to avoid the immediate effects of the new tax.
“We have had to stock up with tons of butter and margarine in order to be able to supply outlets,” Soeren Joergensen of Arla Distribution told Agence France Presse.
“It has been a chaotic week with a lot of empty shelves. People have been filling their freezers,” said Christian Jensen of an independent local Copenhagen supermarket.
Nightmare
The new tax will be levied on all products including saturated fats—from butter and milk to pizzas, oils, meats and precooked foods—in a costing system that Denmark’s Confederation of Industries (DI) says is a bureaucratic nightmare for producers and outlets.
“The way that this has been put together is an administration nightmare, and I doubt whether it will give better health. It’s more just a tax,” DI foodstuffs spokesperson Gitte Hestehave said, adding that the costs of levying the tax would be passed on to consumers.
The new tax in Denmark spurred health experts in Australia and Sweden to push for similar measures in their respective countries.
“Sweden has never before seen as much obesity and overweight people, and it’s a problem that costs $2.9 billion per year,” said Claude Marcus of the Karolinska Institute.
Marcus noted that high-calorie, low-nutrition foods had become relatively cheap in recent decades. At the same time, the price of fruit and vegetables has gone up.
But in Ireland, Health Minister James Reilly last week ruled out the possibility of such a tax in his country, saying he would ask fast food outlets to post calorie counts on their menus instead.
European Union legal expert Jeppe Rosenmejer of the Danish Federation of Small and Medium-sized Enterprises said the EU was studying the tax as there may be a competition issue.
While producers in Denmark have to pay the tax at source, for imported goods it is calculated by the distributor.
“This can mean that imported goods will be cheaper than domestically produced items,” Rosenmejer told the national daily Jyllands-Posten.
A Danish producer will have to pay the tax on all of the saturated fat used, including for example what a product is fried in, he said. An importer may only be paying according to what is actually in the finished product.
“Hopefully the tax will be short-lived,” Rosenmejer said. Reports from AP and AFP