Will a fat tax make Denmark healthier?
Over the weekend, Denmark became the first country to tax saturated fats.
The tax -- 16 Danish kroner per kilogram of saturated fat in a food – works out to about $6.27 per pound of saturated fat. It hits all foods with a saturated fat content above 2.3 percent. Danes reportedly began hoarding butter and other fatty products before the new regulation kicked in.
Denmark’s tax is the first of its kind in other ways. “This is a major development for two reasons: It’s an entire country, and they’ve taken on a particular part of the food supply,” says Kelly Brownell, director of Yale’s Rudd Center on Food Policy, who is widely credited with introducing the idea of a soda tax in the 1990s.
The Danish government implemented the tax because it wanted Danes, who lag behind European life expectancy numbers, to get healthier. Will they? The research on “fat taxes” is sparse, but there’s good reason to be skeptical about the potential public health gains.
One thing we do know about food taxes is that they have to be really high to change behavior. Brownell and Tom Frieden, now director of the Centers for Disease Control and Prevention, wrote in a 2009 New England Journal of Medicine article that the 5 percent taxes on unhealthy foods that states tend to pass just don’t cut it. Brownell’s research has found it takes a 1-cent-per-ounce tax to change behavior; anything lower, will do great at bringing in revenue but likely won’t lower soda consumption.
In reducing fat consumption, the bar may prove to be even higher: While soda isn’t generally thought of as a meal, solid foods are a different ballgame, what people eat when they sit down to dinner or lunch. And what little research we have on fat taxes bears this out. A 2007 study form the Forum for Health Economics and Policy modeled the impact of a 10 percent fat tax on dairy products and found unimpressive results.
“Such a tax results in less than a 1 percent reduction in average fat consumption,” the authors found. “To have a substantial effect, the tax rate would have to be quite high. For example, a 50 percent tax only lowers fat intake by 3 percent.”
Moreover, the authors worried that a fat tax would be quite regressive, hitting lower-income families much harder than higher earners. “The welfare loss to a family earning $20,000 is nearly double that of a family earning $100,000,” they found.
Since the Danish tax covers foods with higher fat content at a greater rate, its impact could be all over the board. It may reduce the consumption of really high-fat foods, but not those with a fat content. Denmark’s Confederation of Industries calculated that the tax adds 12 cents to a bag of chips, 39 cents to a small package of butter and 40 cents to the price of a hamburger.
Denmark’s tax is, in Brownell’s view, an important “bellwether:” He believes it will test both whether the policy works, as well as the political appetite for such levying such fines.
“If foods with saturated fats now cost more, you don’t know what people will eat in their place. The hope is they’ll eat healthier things.”
As we watch the effect of Denmark’s new tax, we’re about to find out.