A recent study by specialists from the Environmental Change Institute and the Oxford Martin School has put forth a bold idea: adjusting value-added tax (VAT) rates on food items based on their health and environmental effects.
Proposed Changes to VAT
The researchers propose that meat and dairy products be subject to full VAT rates, while fruits and vegetables should enjoy a zero rate.
This innovative strategy is designed to encourage consumers to shift towards healthier and more environmentally-friendly diets.
If adopted, it’s estimated that people could increase their weekly fruit and vegetable consumption by one serving, while simultaneously cutting back on meat by the same amount.
The potential health impacts of these changes are significant, with projections suggesting a yearly reduction of around 170,000 cases of diet-related illnesses—such as heart disease, stroke, and diabetes—across the UK and EU.
Environmental and Economic Benefits
Moreover, the environmental ramifications could be profound.
The reform is expected to lead to a decline in greenhouse gas emissions by approximately 50 million tonnes of carbon dioxide equivalent—an amount that mirrors the total emissions of Scotland and Northern Ireland combined.
Interestingly, the demand for agricultural land could shrink by 70,000 square kilometers, an area roughly the size of Ireland, despite an anticipated rise in fruit and vegetable production.
The researchers assert that, if these changes take root, consumers are likely to substitute some of their meat and dairy with fresh produce, resulting in a steady overall expenditure on food.
This shift could also generate substantial tax revenue for governments, potentially boosting the UK’s GDP by 0.6%.
Calls for Action
This isn’t the first time the idea of taxing high-greenhouse gas-emitting foods has surfaced.
Back in 2020, the UK Health Alliance on Climate Change called for a tax on meat to address consumption levels.
Professor Marco Springmann, the lead researcher, emphasizes that the existing tax systems in the UK and EU fall short of effectively tackling food-related health and environmental challenges.
He argues for a modernized tax framework that directly addresses these pressing issues, highlighting that adjusting VAT rates according to health and environmental consequences could provide significant benefits for public health, environmental sustainability, and government finances.
Source: Vegconomist