RESEARCH

The Proof of the Pudding - Denmark's fat tax fiasco
17 April 2014

Denmark's tax on saturated fat was hailed as a world-leading public health policy when it was introduced in October 2011, but it was abandoned fifteen months later when the unintended consequences became clear.

This paper examines how a policy went from having almost unanimous parliamentary support to becoming "an unbearable burden" on the Danish people.

The economic effects of the fat tax were almost invariably negative. It was blamed for helping inflation rise to 4.7 per cent in a year in which real wages fell by 0.8 percent. Many Danes switched to cheaper brands or went over the border to Sweden and Germany to do their shopping. At least ten percent of fat tax revenues were swallowed up in administrative costs and it was estimated to have cost 1,300 Danish jobs.

The economic and political failure of the fat tax provides important lessons for policy-makers who are considering "health-related" taxes on fat, sugar, "junk food&" and fizzy drinks in the UK and elsewhere.

Read the full article by Christopher Snowdon, Director of Lifestyle Economics at the UK's Institute of Economic Affairs:

The Proof of the Pudding 

© Institute of Economic Affairs.



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