Denmark scraps their fat tax

November 17th, 2012 at 12:00 pm by David Farrar

The Greens will be distraught. Denmark has scrapped their fat . The WSJ reports:

Danish lawmakers have killed a controversial “fat tax” one year after its implementation, after finding its negative effect on the economy and the strain it has put on small businesses far outweigh the health benefits.

Nations including Switzerland, the U.K, and Germany have held up the tax, which applies to any food containing more than 2.3% saturated fat, as a potential model for addressing obesity and other health concerns. But in Denmark, it has been a source of pain for consumers, food producers and retailers as the nation’s economy struggles.

“The fat tax is one of the most maligned we [have] had in a long time,” Mette Gjerskov, the minister for food, agriculture and fisheries, said during a news conference Saturday announcing the decision to dump the tax. “Now we have to try improving the public health by other means.”

The failure of Denmark’s fat tax is a demonstration of how difficult it can be to modify behavior by slapping additional duties on products seen by many as essential staples, especially during tough economic times. Products such as butter, oil, sausage, cheese and cream were subject to increases of as much as 9% immediately after the new tax was enacted.

So why was it dropped?

Lone Saaby, director of economic policy at Denmark’s Landbrug & Fødevarer farmers association, said the fat tax “increased border trade as well as administrative costs,” putting Danish jobs in jeopardy. Ms. Saaby’s organization lobbied the government to kill the fat tax and abandon the sugar tax before the impact to employment became too noticeable.

Mr. Giørtz-Carlsen said the fat tax cost his company about €670,000 over one year, and estimates “smaller companies probably had disproportionately higher costs.”

Many want to use the tax system to incentivise what they see as good behaviour. But the more complex you make it, the less effective it is. The best tax system is broad base and low rates with minimal exceptions.

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14 Responses to “Denmark scraps their fat tax”

  1. Peter (1,712 comments) says:

    A tax on faxes? :)

    Can’t imagine that would raise much….

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  2. Dirty Rat (383 comments) says:

    Cool

    You’ll be able to visit that country now

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  3. Harriet (4,972 comments) says:

    “…..The best tax system is broad base and low rates with minimal exceptions….”

    minimal? like what David?[other than the obvious, gambling, smokes and booze] Cheers.

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  4. Viking2 (11,471 comments) says:

    said the fat tax “increased border trade as well as administrative costs,” putting Danish jobs in jeopardy.

    Many want to use the tax system to incentivise what they see as good behaviour.

    Just like the Nats do with employment eh?

    Youth rates that match youth ability and employers need/want/ability to pay for junoirs.

    Lack of GST on imports under $400.00 encourages offshore purchses to escape GST.
    The list goes on and of course don’t forget the anti smacking behavoir bill that interfere’s with family behavoir but doesn’t stop the bashers and abusers.

    oh dear someone has finally figured out the obvious. Please tell johnny boy.

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  5. Reid (16,473 comments) says:

    The best tax system is broad base and low rates with minimal exceptions.

    The best tax system is no income tax and everything on consumption so maybe around 50% GST but you pay no other taxes apart from rates and road taxes.

    The income tax act is massive and you have complex trusts and other vehicles to avoid it. Eliminating all of that in one stroke massively improves the administrative costs of gathering it and it’s self-operating in the economy itself, you can’t avoid it unless the GST-registered business is committing fraud. That’s the only administrative issue.

    Lefties of course hate this because the higher one’s income the less proportion of it you burn up with your consumption, which is why its never mooted, but having a tax like this is non-inflationary. The only downside is that it rises and falls of course as the boom and bust cycles manifest and it falls right at the time the govt might want to spend more but if the nation has managed its debt properly then that’s the time to go into debt. Apart from that it would work brilliantly.

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  6. Redbaiter (8,944 comments) says:

    The best tax is a poll tax.

    The cost of running the country divided by the number of taxpayers.

    EOS.

    (the only system that will put an end to liberal excesses like overspending and borrowing and that will also restore integrity to the democratic process)

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  7. Redbaiter (8,944 comments) says:

    Reid- why should I have to pay more than you, or vice versa if you like?

    Everyone should pay the same.

    Anything else is just dodging your responsibilities, or shifting your own tax burden onto someone else.

    I don’t want you paying my share of tax. Do you want me to pay yours?

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  8. Reid (16,473 comments) says:

    It’s a question of administration RB nothing more. Just as wealthy people now pay $100’s of k compared to others paying say $20k, this continues. When say the wealthy buy a new car they pay $tens of k on the GST on that. In one hit this is more than a years worth of the GST on groceries that others pay.

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  9. Redbaiter (8,944 comments) says:

    So answering the question was too hard was it?

    “I don’t want you paying my share of tax. Do you want me to pay yours?”

    Or maybe, by avoiding it you did answer it.

    You were just ashamed to put it into words.

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  10. Reid (16,473 comments) says:

    You were just ashamed to put it into words.

    No I don’t get ashamed when I explain how someone else is wrong RB, I do try to make the other person feel like that however so here goes with my latest attempt on this.

    “I don’t want you paying my share of tax. Do you want me to pay yours?”

    No, why? What does that have to do with consumption vs poll tax? What are ya, a complete mental? :)

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  11. Kevin (1,122 comments) says:

    This is hilarious. Denmark, on of the last resorts of the desperate socialist trying to justify their ideology having to bactrack on a tax engineered to penalise rich fat cats!

    Taxes should only ever be for running a country, not social engineering.

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  12. Redbaiter (8,944 comments) says:

    “No, why? What does that have to do with consumption vs poll tax? What are ya, a complete mental? ”

    Wel, I was only going on your statement above where you seemed happy that someone you perceived as “wealthy” should pay more than you- in other words pay your share. I don’t see any logical reason for anyone to pay your share just because they reach a threshold that you might describe as wealthy.

    The outcome of this is that you (figuratively) will just keep asking for the”wealthy” to be taxed more and more. It continues to extend to government a license to spend and spend and spend.

    That’s the difference between the poll tax and a consumption tax. That’s “what it has to do with it”.

    The consumption tax idea still operates on the basic idea that some should pay more than others.

    The underpinning argument for a poll tax is that everyone pays exactly the same.

    Get it?

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  13. Reid (16,473 comments) says:

    The consumption tax idea still operates on the basic idea that some should pay more than others.

    So what? The consumption tax RB has what a poll tax doesn’t. Choice.

    One can choose what to pay tax on, under a consumption tax, an option which isn’t possible under a poll tax, which is one size fits all.

    That’s why your idea is really stupid and mine is brilliant RB.

    Does that make you feel really, really embarrassed? Because I would be, if I were you…

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  14. BigFish (132 comments) says:

    Funny – I’d always assumed redbater was on the pension.

    As to the fat tax, far too hard to police.

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