A study led by researchers from the Environmental Change Institute and the Oxford Martin School has recommended that VAT (value-added tax) rates on food should be set based on health and environmental considerations.
The authors suggest that meat and dairy products should be subject to full VAT rates, while fruits and vegetables should be zero-rated. They say this would help consumers choose healthier and more sustainable diets; on average, it is expected that fruit and vegetable intake would increase by around a portion per week, while meat consumption would decrease by the same amount.
The researchers estimate that these reforms could reduce cases of diet-related diseases such as heart disease, stroke, and diabetes by 170,000 per year in the UK and EU.
“Adjusting VAT rates based on their health and environmental impacts is as good as a no-loss policy gets”
Meanwhile, greenhouse gas emissions could be cut by 50 million tonnes of carbon dioxide equivalent, a similar amount to the emissions of Scotland and Northern Ireland combined. Demand for agricultural land would be reduced by 70,000 km2 — an area similar to the Republic of Ireland — despite an increase in fruit and vegetable production.
The authors predict that if the reforms were made, consumers would replace some meat and dairy products with fruits and vegetables, meaning that the overall cost of their diets would remain similar. However, greater tax revenues would be generated which governments could use elsewhere, amounting to an increase of 0.6% of GDP in the UK.
“Tax systems are not fit for purpose”
The concept of higher tax rates for higher-emission foods is not a new one. In 2020, the UK Health Alliance on Climate Change recommended that meat should be taxed to curb consumption.
Dale Vince, the founder of renewable energy firm Ecotricity and a major donor to the UK’s Labour Party, also called for a tax on red meat last year. Meanwhile, Denmark has announced plans to introduce what is claimed to be the world’s first carbon tax on livestock emissions.
“When it comes to food, tax systems across the EU and the UK are currently not fit for purpose,” said Professor Marco Springmann, the lead author of the study. “A modern tax system that addresses the critical health and environmental challenges of the food system is urgently needed. Adjusting VAT rates based on their health and environmental impacts is as good as a no-loss policy gets whilst delivering benefits for public health, the environment, and even government revenues.”
