Businesses call on government to trim fat and sugar taxes

While tax negotiators use controversial levies as bargaining chips, business leaders just want them gone

Share price has been rising steadily since January (photo: iStock)
June 26th, 2012 3:31 pm| by admin
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The country's business leaders are unequivocal in their desire to have those cutting the nation's new tax deal to toss the current fat tax and proposed sugar tax into the bin.

“These taxes cost Danish jobs,” Jens Klarskov of Dansk Industri, a Danish business advocacy group, told TV2 News.

While the taxes remained in place Friday evening when the government forged its tax reform deal with the oppostion party Venstre, Politiken newspaper reported that by Sunday the government had offered to eliminate them in exchange for making up the funds by raising the base tax rate to 0.34 percent. MPs from Venstre would not agree to the deal, however.

"We can not raise the threshold for top-bracket tax on Friday and then raise the marginal tax rate on Sunday,” Torsten Schack Pedersen, Venstre’s tax spokesperson, told the newspaper. “That is not how we work.”

Meanwhile, the country’s business leaders continued to call for the taxes to be dropped.

Jørgen Hoppe, president of HK, a union for clericial and service-sector workers, said he was “enormously happy” when he heard there was a chance they would be cut from the tax reform deal.

"Every time you put new taxes on fat, sugar and spirits, people simply cross the border to shop and that sends jobs out of the country,” Hoppe told Politiken newspaper.

Hoppe said he believed that the two levies could easily cost 2,000 jobs in Denmark.

The fat tax garnered international attention when it went into effect last year with news outlets as far-flung as the BBC, Time Magazine and Al-Jazeera all reporting on the levy. Health specialists and policy makers around the world are waiting to see if the fat tax will actually cut the country’s obesity rates, or, as business leaders claim, just send customers to Sweden and Germany to load up on lardy foods.

Business leaders warn that the sugar tax set to go into effect next year will not only cost jobs, but may even cause some businesses to close.

Food manufacturer Beauvais said the tax will cause the price of a jar of jam to nearly double and could cause the company to shut down its Danish plants.

"It would be a counter-productive move to increase taxes that are likely to cause much more damage than the modest benefit it will bring to the treasury," said Klarskov.

Even though Venstre rejected the government’s latest proposal, the economy minister, Margrethe Vestager (Radikale), said the issue is still open to discussion.

“Negotiations are not over and we realise that these two taxes are harmful,” Vestager told Politiken. “The contribution that sugar and fat taxes make to better health is outweighed by their effect on businesses.”

Frank Aaen, a spokesperson for the far-left Enhedslisten party, said any negotiations over the taxes are useless unless his party is involved, because their votes helped to secure their passage.

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