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Tue November 13, 2012
Danes May Bring Back Butter As Government Rolls Back Fat Tax
Originally published on Thu November 15, 2012 3:34 pm
Toothbutter: noun. Butter spread so thickly as to reveal teeth marks upon biting.
The fact that this word exists in the Danish language should help to explain what politicians were up against when they introduced the "fat tax" just over a year ago. This is a country that loves it some butter (and meat, and all things dreadful to the arteries).
The goal of reducing waistlines and increasing life expectancy may have been laudable, but the previous administration's decision to charge consumers 16 kroner (about $2.75) per kilogram of saturated fat in order to achieve that goal was much maligned from the get-go.
Social advocates said it would unfairly affect the poor and worsen their health by sending them toward more caloric, lower quality food. Business leaders said it would cost Danish jobs as consumers scampered across the border to Germany to stock up on groceries. Danish butchers sued, saying the tax violated European Union trade rules. Some consumers accused supermarkets of using the tax as a screen to inch prices even higher. Other skeptical residents saw it as just one more way for the government to line its coffers.
This cacophony of dissent meant no one was particularly surprised this weekend when the government announced that the fat tax would be abolished as part of the 2013 budget agreement. In the same breath, the administration also put the brakes on a "sugar tax," which had yet to take effect.
As you can imagine, the world is watching. As The Washington Post notes, the timing of the repeal is interesting, given other, fatter countries' efforts to regulate what people eat in an effort to save us from our most unhealthy habits. (Ahem, New York and other cities' trans fats ban, New York's soda size limit, and the U.S. government's calorie labeling requirement.)
In its explanation of the move, the Danish Tax Ministry cited several of the aforementioned criticisms ("lining the coffers" excepted). A few public officials have also recently been quoted as saying they don't believe it's possible for a country to tax its way to health. But in general, while there's been plenty of discussion about the economic ramifications of the fat tax, it's more difficult to find any hard-nosed assessment of whether it worked. Did it needle any butter-hungry Danes into cutting back?
The answer just might be yes. Just as the government was announcing its decision to abolish the tax, the newspaper Information printed a story about an as-yet unpublished study by the Institute of Food and Resource Economics at Copenhagen University. According to the institute's report, Danes' consumption of butter, margarine and oil did, in fact, fall by 10-20 percent in the three months after the fat tax went into effect, as compared with the same time the year before. But it's unclear whether the credit should go to the law or the poor economy.
Shopper Gundi Halfmann says she has changed her ways. "If you're even just a little bit price-wise," she says, "you notice the difference. I haven't bought liver pate for a long time. It used to be 15 kroner, and now it can be all the way up to 30. It's crazy."
Halfmann says she's skeptical, though, that supermarkets will actually lower prices once the tax comes off the books. "Maybe a little bit at first, but then they'll go up again."
Meanwhile, Denmark's food minister is reportedly asking major grocery chains to promise that they will lower prices.
Welcome back, toothbutter.
STEVE INSKEEP, HOST:
Just over a year ago, Denmark became the first country in the world to impose a tax on saturated fat. Now whether this tax has actually succeeded in trimming waistlines is up for debate. But it has caused enough controversy that, come January, this short-lived experiment will be over.
As Sidsel Overgaard reports, it turns out raising the price of fat isn't so popular in a country whose lexicon includes the word tooth-butter.
SIDSEL OVERGAARD, BYLINE: Toothbutter. You know, when there's so much butter on your bread that each bite leaves a stripe where your teeth have been? Denmark's obesity rate may be low compared to many other countries, but its love of meat and dairy had officials in the previous administration worried enough to levy the so-called fat tax last October. On a pound of butter, it amounts to about 75 cents.
(SOUNDBITE OF SHOPPING CART)
OVERGAARD: As Gundi Halfmann wheels her shopping basket through a grocery store in the city of Herning, she says the tax has definitely changed a few of her habits over the past year.
GUNDI HALFMANN: (Through Translator) Yes, it has. I haven't bought liver pate in a long time. It's simply become too expensive. You used to be able to get it for 15 kroner and now it can be all the way up at 30. It's crazy. If you're even a little bit price-wise, you can definitely feel the difference.
OVERGAARD: The problem is that what's good for Danish arteries is not necessarily good for Danish business. Halfmann, like many residents in this part of the country, indulges in shopping sprees across the German border, where things like beer and wine have always been cheaper.
HALFMANN: (Through Translator) When we drive over the border, there is more being bought than before - other things. It used to be cigarettes and soda and wine, now it's meat products. You could see it in all the shopping carts.
OVERGAARD: Those two things - reduced consumption and more shopping in Germany -add up to bad news for workers like Ole Skov Christensen.
OLE SKOV CHRISTENSEN: I work in a dairy business so it was quite a shock to us. And we were afraid that our sales would go down. And as I saw recently, it was going down 20 percent.
OVERGAARD: No surprise, then, that the Danish Chamber of Commerce has been fighting the fat tax every step of the way. Head of food policy, Lotte Engbaek Larsen says it's been a struggle for producers and importers who have to grapple with an incredibly complex tax formula. She says this year the fat tax brought in about $250 million and cost $30 million to administer.
LOTTE ENGBAEK LARSEN: The tax is so complicated that you have to foresee a lot of administrative burden in the future as well, because the food market is very dynamic and food changes all the time. You know, new recipes, new product lines and so on. So therefore, you have to recalculate this tax all the time, and that makes it very burdensome.
OVERGAARD: Every one of these issues was cited by the Danish tax ministry in its explanation of why the fat tax will be abolished as part of the government's 2013 budget. But the real story, says shopper Karen Marie Massen, is that what hurts businesses and consumers, hurts politicians.
KAREN MARIE MASSEN: (Through Translator) They change everything around all the time to score points. That's politics at its height. It's just to get votes.
OVERGAARD: Like most Danes in this grocery store, Massen says she agrees with the goal of the tax in principle. It's just that right now, on the scale of voter concerns, there's no question that economics is outweighing weight.
For NPR News, I'm Sidsel Overgaard in Herning, Denmark. Transcript provided by NPR, Copyright National Public Radio.