Danish Government May Scrap Its "Fat Tax"
MP: Taxes are always distortionary, for one reason: People can change their behavior to avoid them, as this case demonstrates.Only one year after its implementation, the Danish government is planning to scrap the “fat tax.” The reason why: reports show that it simply doesn't work.Denmark is now likely to abolish the tax levied on saturated fats, as empirical evidence shows that its negative effects outweigh the benefits for the Danish Treasury. In particular, reports point to job losses in the food processing industry and Danes crossing the German border to buy cheaper products.The proposals to scrap the fat tax have been included in the 2013 draft budget, which is currently under consideration by Parliament. Under current law, Denmark is applying a tax of DKK16 ($2.40) per kg of saturated fat on food items. This tax was introduced back in autumn 2011 to combat obesity and raise tax revenues.
Update: In the comments section, Scott Drum poses an excellent question:
"Why is that liberals constantly embrace the idea that taxing something of which they don't approve (fat, soft drinks, gasoline) will result in less of that thing being produced/consumed, but insist that increasing taxes on investment or income won't have any affect on those activities?"