Danish lawmakers have killed a controversial “fat tax” one year after its implementation, finding that the tax’s negative effect on the economy and small businesses far outweighed any health benefits.

According to news sources, nations such as Germany, Switzerland and the United Kingdom have held up the tax, which applies to foods containing more than 2.3 percent saturated fat, as a potential model for addressing obesity and other health concerns. But in Denmark, the tax has become a source of pain for consumers, food producers and retailers as the nation’s economy struggles.

The Danish tax ministry has evidently said that fat and sugar taxes have drawn criticism for increasing prices for consumers and companies alike, and putting Danish jobs at risk, as well as for encouraging Danes to travel across the border to buy cheaper foods. As the tax ministry thus stated, “The suggestions to tax foods for public health reasons are misguided at best and may be counterproductive at worst. Not only do such taxes not work, especially when they choose the wrong foods to tax, [but] they can become expensive liabilities for the businesses forced to become tax collectors on the government’s behalf.” See Danish Tax Ministry Statement, November 10, 2012.

Others in the industry concur. “Instead of imposing arbitrary taxes, we have to empower consumers to make healthier choices that will lead to a balanced diet and healthy lifestyle by providing clear nutrition labeling, developing healthier choices and changing recipes to reduce the saturated fat, salt and energy content of many much loved brands,” Food and Drink Federation Director Terry Jones told reporters. See FoodManufacture.co.uk, November 13, 2012.

The Danish government has also canceled a proposed sugar tax that would have taken effect in January 2013. Additional information about the fat tax appears in Issue 412 of this Update.