ABOLITION OF "FAT TAX" IN DENMARK-WHAT IS THE LESSON LEARNED?

"Taxing your way to health" is a favorite slogan for may health purists, the idea being to make unhealthy foods too costly for the consumers to buy in the market. It was Denmark, one of the more affluent countries coming under the umbrella of European Union which was the first nation to introduce a fat tax on products containing more than a certain percentage of fat in the product marketed by the industry. But surprisingly it withdrew this new tax recently after coming to the conclusion that such punitive taxes just do not work. A larger question that remains unanswered is whether the tax policy, tried out in a country with no borders as that exist between independent countries, could have been more successful in any other country? For example, what would have been the result if such a policy was tried out in India where consumers cannot go to a neighboring country like China that easily and which is the world capital of "cheap" consumer goods, Bangladesh or Sri Lanka or Nepal? Probably it would have had a better chance of success. Here is a report about the experience of Denmark in imposing a fat tax and later withdrawing it.

"About a year ago, the Danish government tested out a policy never before seen in the world. It implemented an across-the-board tax on all foods with a saturated fat content above 2.3 percent, with the hopes of reducing consumption of unhealthy foods. But it didn't quite work that way. Some Danes did indeed switch to lower fat cheeses  and dairy products, The Wall Street Journal's Clemens Bomsdorf reports. But a lot of them simply began to do their grocery shopping internationally, heading to countries that didn't levy a fine on fat: There is little evidence the tax impacted consumers financially, but it did spark a shift in consumer habits. Many Danes have bought lower-cost alternatives, or in some cases hopped the border to Germany, where prices are roughly 20% lower, or to Sweden. >The Sky supermarket located in northern Germany was one company benefiting from the trend. Last week, more than half the cars in the crowded parking lot had Danish license plates. >"We did not use to buy cheese here, but the price difference for our favorite type is now more than 30%," Anitha Nissen said, while helping her husband load groceries into their silver Suzuki. The Danish couple now crosses the border three or four times a year to stock up on goods. The Danish government announced Saturday it would abolish the fat tax as part of budget negotiations there. Denmark's experience suggests one of the big challenges with regulating unhealthy foods: People can always switch to an alternative, that's a bit less expensive".

There are two consumer items in the world which are taxed heavily-Cigarette and Alcohol but what has been the experience? It is true that neither consumption of alcohol nor cigarette has disappeared though a few were forced to reduce the consumption for economic reasons but is the number of those stopping the consumption significant enough to make an impact? This point requires in-depth analysis to shape any future options mankind may think about in tackling these undesirable consumption trends. Besides fat, other food ingredients like sugar and salt are also under scrutiny as they are implicated in many human disorders and a coherent action plan is the need of the hour for overcoming such food related health contingencies in future. Education at an early stage regarding the adverse consequences of consuming unhealthy foods, social pressure, public policies and incentives by the government may still have a chance to de-addict people from unhealthy practices.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com