‘Fat tax’ plan axed due partly to inflation fears

Korea remains opposed to introducing the so-called “fat tax,” the Ministry of Strategy and Finance said yesterday.

It is the first time the government has publicized its opinion of the controversial tax, which would impose a surcharge on foods and beverages that contain excessive amounts of saturated fats.

Denmark was the first country to implement the policy last year in a bid to increase the life expectancy of its people.

“It is not desirable to introduce a new tax on foods given the [inflationary] situation we are facing as it could ramp up food prices,” the ministry said in a report analyzing the policies of major countries in connection with obesity problems.

Korea has a relatively low level of obesity, and an additional tax on foods could hurt low-income earners the most by increasing food prices, the ministry explained.

The government has been aggressively tackling inflation as rising commodity and oil prices kept consumer price growth fractionally above its target of 4 percent last year.

Introducing the proposed tax would place a heavy burden on poorer households, the ministry said. It claimed that families with higher incomes buy healthy amounts of vegetables and fruits, while those in low-income brackets tend to consume more fatty fast foods such as hamburgers and instant noodles.

Apart from Denmark, which has started taxing butter and oil for the first time in the world, a number of Western countries are considering introducing fat taxes on unhealthy foods. Hungary is also levying such a tax on soft drinks, pastries and salty snacks.

The move is not just aimed at tackling obesity by discouraging consumption of junk foods but also aims to raise revenue for many debt-ridden countries, including those in Europe, experts said.

“Rather than talking about obesity in the same vain as debt-ridden European countries and the U.S., which see it as a major tool to expand tax revenue, we need to develop and provide measures tailored for both genders and each age group to tackle the problem,” the ministry said.

By Lee Eun-joo, Yonhap [angie@joongang.co.kr]