The European Commission suspects that Denmark’s so-called ‘fat tax’, introduced in 2011 but scrapped a year later, could be considered illegal state aid.
Opening the case on Thursday (5 February), the EU executive said it sought to determine whether or not food producers who were not forced to add an extra fat tax on their products received illegal assistance.
The Danish fat tax was introduced by the previous centre-right government to promote healthier diets and came into effect in October 2011. The tax was put on meat, dairy products, oils and other foods which contained more than 2.3% of saturated fat.
But the new centre-left government currently in power decided to abolish the tax in January 2013, citing administrative burdens.
The Commission’s current view is that all products with saturated fats should have had the fat tax added.
“I am puzzled why the Commission raises this case now, when the tax was repealed more than two years ago,” Benny Engelbrecht, the Danish minister of taxation, said in a statement. “But the government will have a dialogue with the Commission in order to find a sensible solution,” he added.
If the Commission concludes that these producers’ products should have been included into the overall fat tax scheme, Denmark will have to collect the extra tax with compound interest. Even producers that were covered by the fat tax are at risk of having to pay an additional bill.
“We will do everything we can in order to make sure that this won’t be the reality,” Engelbrecht said.
In the 1990s and early 2000s, various Danish governments set up many proactive measures in order to combat cardiovascular disease with the fat tax and the ban on trans fatty acids in 2003 as two examples. This meant that the number of Danes who died from cardiovascular disease fell by 70% between 1985 and 2009. No EU member state has a recorded a greater decline in mortality.
However, the trans fatty acids ban also resulted in a lawsuit by the Commission over the potential discrimination of foreign fast food chains. This lawsuit was eventually dropped by the Commission.
The fat tax meanwhile was dropped by the Danish government after it claimed the tax created administrative burdens, a dramatic rise in border trade, and uncertainty among consumers about what food products should cost.
On 1 October 2011, Denmark got a 'fat tax' in order to battle unhealthy lifestyles. The fat tax - of 16 crowns (€2.14) per kilo - was applied to meat, dairy products and cooking oil which consist of more than 2.3% saturated fat. It was widely criticised for hitting the weakest groups within the society.
But Denmark decided to abolish its fat tax after barely a year, citing too many negative side effects hitting businesses. A proposed sugar tax that was meant to be introduced in 2013 was likewise scrapped.
- Danish Ministry of Taxation: EU Commission to charge extra tax after old fat tax (In Danish)