Effects of a modified Danish fat tax on food consumption and nutrients intake in Spain

Our current dietary habits are the major cause of obesity and related diseases change. Denmark introduced fat tax in 2011 that was abolished in 2012 because of detrimental economic impacts. However, post-tax studies show that the tax was beneficial in reducing saturated fat consumption from the targeted foods. Demand- side measures have been proven to be efficient at reducing unhealthy foods. This study aims to assess the distributional effects impact of introducing a Danish-type fat tax (DFT) equivalent on food demand in Spain. Alternative tax policy scenarios have been considered taking into account policy that compensate consumers with subsidies form the taxes and otherwise. In the case where the taxed food categories only represent a subset of total food categories, a revenue-neutral approach has been designed. Expenditure as well as own- and cross-price and nutrient elasticities were calculated from an EASI food demand system. The tax reduced the consumption of the food products with saturated fat or lipid higher than 2.3%. Total lipid declined while carbohydrate intake increased. The effect is significantly reduced when revenue-neutral scenarios are considered. Distributional effect of the tax is more evident on household s heads who are obese, overweight, and younger