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October 3, 2011

Best bits: Danish fat tax gives industry plenty to chew over

Across the North Sea today, Denmark will hear its new government's plans for the country when prime minister Helle Thorning-Schmidt and her new cabinet present their policy programme. When the Danes chew over those plans tonight, perhaps over dinner, they will also likely be discussing a policy introduced by the previous administration that went live over the weekend and has attracted global headlines.

By Dean Best

Across the North Sea today, Denmark will hear its new government’s plans for the country when prime minister Helle Thorning-Schmidt and her new cabinet present their policy programme. When the Danes chew over those plans tonight, perhaps over dinner, they will also likely be discussing a policy introduced by the previous administration that went live over the weekend and has attracted global headlines.

On Saturday (1 October), a tax on foods high in saturated fat was introduced in a bid to encourage Danes to eat more healthily. The price of foods including butter, cheese and meat, as well as convenience food items like pizza will increase as part of efforts to cut improve public health in Denmark.

However, as we reported earlier this year, the tax, first put forward in 2008, has attracted criticism from parts of the country’s food industry. Opponents, pointing to existing taxes on items like confectionery, said the new levy could lead Danes to shop over the border to buy food at lower prices in countries like Sweden and Germany. Others questioned the rationale behind the fat tax. Denmark’s dairy sector, for example, said US research had questioned the link between saturated fat and cardiovascular disease.

Nevertheless, in a country synonymous with foods like butter and bacon, consumers now face paying more for products high in saturated fat. The previous Danish government had put forward a plan to levy a tax of DKK13.50 per kilogram of saturated fat. After amendments to the proposals in July, the levy was raised to DKK16. Our report earlier this year carried a government estimate from the that the fat tax could raise DKK1.5bn (US$268.6m) a year. Such proceeds mean the new, centre-left coalition, is unlikely to reverse the levy.

Other governments in Europe will be watching the impact of the tax closely. Such a levy is unlikely to be supported by the UK government, which has a public health policy that puts ‘nudging’ over ‘nannying’ but Finland, for example, which like Denmark levies taxes on foods high in sugar, has already called a fat tax “the logical next step”. Norway and Sweden have also been examining whether to introduce their own similar levies since 2007.

Last week, another move believed to make it easier for European consumers to make more informed choices about the food they buy took a step nearer to becoming law. As expected, the EU’s Council of Ministers ratified new rules on how food is labelled throughout the trading bloc. The regulations are set to become law later this year. Food manufacturers will have three years to adapt to the new rules, although they will have an extra two to meet new regulations on nutritional labelling.

The laws have been years in the making, with frenzied debate between industry and consumer groups. Last week, FoodDrinkEurope, the European food industry organisation, reflected on what it called a “long and often arduous process” but said it welcomed the Council’s ratification. It, however, called on the European Commission to ensure that it consults with stakeholders on the issues left on the table, including the measurement of the impact of a possible further extension to country-of-origin labelling. The Commission is to look into whether the new rules on country-of-origin labelling could be widened to products including those that use meat as an ingredient, to unprocessed foods and to milk. After the years of debate over the new regulations, it is more than likely that any further changes will prove as equally as contentious.

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