In Denmark, the Government has proposed removing a long-standing tax on chocolate and coffee to give some relief to consumers. Photo / 123rf
In Denmark, the Government has proposed removing a long-standing tax on chocolate and coffee to give some relief to consumers. Photo / 123rf
As food prices continue to soar in Denmark, the Government has proposed removing a long-standing tax on chocolate and coffee to give some relief to consumers.
“We have chosen something that will have an immediate effect on Danes, who will immediately feel that they have more money at their disposal,”the country’s Deputy Prime Minister, Troels Lund Poulsen, told Danish broadcaster TV2.
The tax break, which would apply to all products containing cocoa, as well as to liquorice, sugary cereals, some cakes, chewing gum and other sweets, would be the largest tax cut on groceries in the country in more than a decade.
If it is passed, the price of 17 ounces of coffee beans is expected to fall to 74.5 Danish kroner (US$12), from 79.5 kroner (US$12.5).
Food prices in Denmark are among the highest in the European Union, surpassed only by Luxembourg, according to Danish statistics.
In March, food prices in Denmark were up 5.8% from a year earlier, far surpassing the 2.3% inflation rate for goods and services in the country, according to figures released last month.
The tax cut would cost the Government 2.4 billion Danish kroner (US$376 million) in lost revenue.
Jacob Funk Kirkegaard, a senior fellow at economic think-tank Bruegel in Brussels, said lowering taxes would also be a way for Danish Prime Minister Mette Frederiksen to position herself as someone who cared about the everyday person, especially important as support for her party falls in the polls.
“It’s always worth remembering that this is basically a government that has more money than it knows what to do with,” Kirkegaard said.
Focusing on scrapping taxes on sweets and coffee provides a helpful distraction from the fundamental tax overhaul that Denmark needs, he said.
“It is politically convenient because it avoids worse discussions” that would risk creating splits within the governing coalition, he added.
If the proposal passes, the lost revenue will not make much of a difference to the country’s finances, he said.
Coffee consumption in Scandinavia is among the highest in Europe, and it’s not unusual for Danish people to drink “aftenkaffe”, or evening coffee.
In Denmark, Sweden and Norway, people consume about three cups of coffee a day, only slightly less than in Finland, where people drink about 3.5 cups per day, according to Kaffe Information, a website about coffee drinking habits.
Global cocoa prices have nearly tripled over the past two years because of low supplies caused by poor weather conditions. Photo / Chaideer Mahyuddin, AFP
Coffee prices around the world have risen substantially because of shortages related to extreme weather and increased global demand.
Global cocoa prices have nearly tripled over the past two years because of low supplies caused by poor weather conditions in Ivory Coast and Ghana.
The proposal came days after officials in Denmark said they planned to exempt books from the value-added tax, or VAT. The change would help make books more affordable and was made to encourage more people, especially younger ones, to read.
