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The Danish tax on saturated fat. Short run effects on consumption and consumer prices of fats

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Author Info

  • Jørgen Dejgård Jensen

    ()
    (Institute of Food and Resource Economics, University of Copenhagen)

  • Sinne Smed

    ()
    (Institute of Food and Resource Economics, University of Copenhagen)

Abstract

Denmark introduced a new tax on saturated fat in food products with effect from October 2011. The objective of this paper is to make an effect assessment of this tax for some of the product categories most significantly affected by the new tax, namely fats such as butter, butter-blends, margarine and oils. This assessment was done by conducting an econometric analysis on weekly food purchase data from a large household panel dataset (GfK ConsumerTracking Scandinavia), spanning the period from January 2009 until December 2011.The econometric analysis suggest that the introduction of the tax on saturated fat in food products has had some effects on the market for the considered products, in that the level of consumption of fats dropped by 10 – 20%. Furthermore, the analysis points at shifts in demand from high-price supermarkets towards low-price discount stores – a shift that seems to have been utilized by discount chains to raise the prices of butter and margarine by more than the pure tax increase. Due to the relatively short data period with the tax being active, interpretation of these findings from a long-run perspective should be done with considerable care. It is thus recommended to repeat – and broaden – the analysis at a later stage, when data are available for a longer period after the introduction of the fat tax.

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File URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2012/WP_2012_14_Danish_fat_tax.pdf
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Bibliographic Info

Paper provided by University of Copenhagen, Department of Food and Resource Economics in its series IFRO Working Paper with number 2012/14.

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Length: 39 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:foi:wpaper:2012_14

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Web page: http://www.ifro.ku.dk/
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Related research

Keywords: fat tax; demand response; price response; retail sales;

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  1. Olivier Allais & Patrice Bertail & Véronique Nichèle, 2010. "The Effects of a Fat Tax on French Households' Purchases: A Nutritional Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 228-245.
  2. Chouinard Hayley H & Davis David E & LaFrance Jeffrey T & Perloff Jeffrey M, 2007. "Fat Taxes: Big Money for Small Change," Forum for Health Economics & Policy, De Gruyter, vol. 10(2), pages 1-30, June.
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  1. The short-run impact of taxing saturated fats
    by Economic Logician in Economic Logic on 2012-12-20 15:58:00

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