The Danes don’t necessarily eat like this every day, but it must be enough to warrant Denmark’s recent imposition of the world’s first “fat tax”. The tax, which came into effect on Oct 1, is imposed on foods containing more than 2.3% saturated fat, including butter, cream, cheese, meat and processed food. Danish officials say the tax is aimed at encouraging healthier food consumption by limiting the population’s intake of fatty foods.

 

The majority of the Danish parliament may have voted the tax in, but it is not an easy one to swallow for a nation that is a major producer and exporter of dairy and pork products. The fat tax will cost an average family of two adults and two children an additional DK1,000 ($235) a year, based on their current consumption habits, according to Danish Agriculture and Food Council estimates quoted by The Copenhagen Post, Denmark’s English weekly.

 

For businesses, the fat tax has become an administrative nightmare. The levy is not straightforward to implement, as it is based on the weight of saturated fat in food products: DKK16 per kg of saturated fat. My friend Lars, who is in the frozen pastry business, complains that the fat duty has made it challenging to price his company’s products, as he also needs to include rebates offered to customers.

 

The new tax is also a huge financial burden for businesses. According to a study conducted by the Danish Food and Drink Federation, food companies will incur DKK10 in administrative costs for every DKK100 collected in taxes. Danish food giant Arla Foods has said that the fat tax will cost between DKK4 million and DKK5 million in administrative costs; the conglomerate anticipates losing up to DKK125 million in annual revenue, Danish business daily Børsen reports.

 

The food industry may be heavily critical of the move, but with obesity an increasing problem, Denmark’s fat tax is just part of a growing trend among European countries looking to use taxes to curb unhealthy eating habits among their population. In September, Hungary introduced a “chips tax”, levied on food products with excessively high sugar or salt content such as carbonated drinks, pre-packed biscuits and chips. This was extended a month later to cover coffee, beer and alcoholic beverages.