Saturday, November 17, 2012

The Real Tax... Was In Your Heart All Along

About a year ago, I mentioned here that Denmark had imposed a 'fat tax' on foods containing over 2.3% saturated fat, as an effort to bring down obesity rates. A planned sugar tax was also shelved.

Earlier this week, the fat tax was abandoned. Whether it was working is a little tough to tell, because it was only the one year. But we can infer a little bit. Some people did in fact switch to lower-fat foods, as per the aim; however, others did the exact same thing people do in the United States when they want to skirt cigarette taxes or buy fireworks or alcohol or whatever has different sets of state laws governing it: hop the border and buy from whoever's letting you have what you want. In this case, they hopped the border to Germany and Sweden.

So it would work about as well as any of those state laws would work here, really. Make of that what you will. It's one of those things that will have some effect, but if you really want the dividends to start paying, you need to go in with a neighbor or two.

That wasn't really the only reason, though. It was really abandoned as part of annual budget negotiations within a minority government. A minority government is, in a parliamentary system like Denmark's, a government in which no one party has an outright majority and a coalition has to be cobbled together from multiple parties in order to create a majority. In this case, four parties (containing 44, 17, 16 and 12 seats) aligned to make a three-seat 89-86 majority. That's a coalition with a lot of failure points, and things need to get negotiated and compromised heavily to make it through- if just two people break off the alliance and cause it to lose a vote of no confidence, a whole new election can be forced on the spot. And in this case, the fat tax just got caught out on political grounds. Officially, higher prices for consumers and potential loss of jobs were cited, but then, higher prices were kind of the point of the tax in the first place. And taxes aren't really a dirty word in Scandinavia anyway, at least not as much as they are in the United States.

A lot of the stories on the abandonment seem to take the 'higher prices, hopping borders, didn't work, COMPLETELY FAILED, I SAID GOOD DAY, SIR' tack and stopped right there. And then they cut to triumphant statements from the food industry amid dire warnings for anyone on the planet that ever dares try that again. Let me just say that I'm not about to take the word of at face value on this. They may be a little biased.

Although that may clue you in to one other reason the fat tax may have been abandoned.

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