Denmark has scrapped the world’s first “fat tax”, which was charged on foods high in saturated fats, after just one year. Plans to introduce a tax on sugar have also been abandoned.

In making the announcement, the Danish government said the tax had been criticised for increasing prices for consumers and companies, and for putting Danish jobs at risk.

The government also said that because the tax pushed up the price of dairy products, meat and processed foods, some Danes had begun crossing the border into Germany and Sweden to stock up on cheaper food.

The impact of the tax

The tax was introduced in October 2011, in an attempt to limit the population’s intake of fatty foods, and reduce obesity rates. According to the Danish National Health and Medicines Authority, 47% of Danes are overweight and 13% are obese.

Despite the reasons given for scrapping the tax, it does not appear as though a formal evaluation of the impact of the tax has been conducted. Accordingly, it is not possible to comment on what impact the tax actually had on consumer behaviour and costs to businesses and the economy.

The decision comes as a disappointment to public health advocates who have recommended taxes on unhealthy foods as a way of addressing obesity and other health concerns. A formal evaluation of the impact of the tax could have been used to inform other governments, such as the United Kingdom and Ireland, currently considering taxes on unhealthy foods.

A political decision

The move to end the tax appears to be a political one. Denmark currently has a minority government in place, and requires support from multiple parties to pass legislation in parliament. The announcement came as part of negotiations on the 2013 budget.

While we can only speculate on the political influences behind the decision, we do know that powerful multinational food and beverage manufacturers, often referred to as “Big Food”, are strongly against taxes on unhealthy foods. Trade associations representing the food industry have campaigned vociferously to avoid these types of taxes. Given the enormous influence of Big Food, it is reasonable to expect that they had at least some influence over this decision.

This echoes the failure of the European parliament to introduce traffic-light labelling on foods, following the successful €1 billion lobbying campaign by Big Food in opposition to the proposed labels.

The tremendous influence of corporate power on public decision making is a major public health concern. As the high rates of diabetes, heart disease and cancer continue to put enormous burden on our society, the public health implications of business decision making – particularly with respect to food environments – needs to be more thoroughly investigated than it currently is.

Situation in Australia

In Australia, there has been no indication by governments that new taxes on unhealthy foods are being considered. Other regulatory options to tackle obesity, such as restrictions on the marketing of unhealthy foods to children, are also not on the government agenda. This is despite convincing evidence that these interventions are likely to work and be cost-effective.

Instead, governments are leaving the processed food industry to regulate their own efforts to improve food environments. Detailed analysis has shown how Big Food’s own advertising codes that claim to protect children from junk food advertising have resolutely failed. The food industry continues to promote their products despite childhood obesity sitting at record levels.

Implications for other governments

While we don’t know know if Denmark’s fat tax would have had its desired impact on public health, the worry is that other governments may see Denmark’s short-lived and un-evaluated experiment as a political failure and a warning not to investigate similar options themselves.

The biggest concern is that governments around the world appear to be acting in favour of corporate interests, whilst not considering the long-term health of society.

The hope is that governments will show the political will to continue to investigate and evaluate cost-effective strategies to improve population diets and prevent obesity. These may be in the form of the Danish fat tax or others, such as taxes on soft drinks. Other options may be bans on the marketing of unhealthy foods, or restrictions on serving sizes, such as the limit recently imposed in New York.