Removing VAT from healthy foods and applying taxes to unhealthy, higher carbon ones could “save lives”, according to researchers in Sweden. The changes would also be tax-neutral, the experts at the Chalmers University of Technology said.
“Integrated tax reforms […] could reduce Sweden’s food carbon footprint by an amount equivalent to an 8% reduction in passenger car emissions, alongside co-benefits such as decreased pesticide and fertiliser use and lower ammonia emissions,” they wrote in their paper for the journal Ecological Economics. “In addition, the healthier diets simulated as a result of the integrated reforms are estimated to save more than twice as many lives as those lost to road traffic fatalities.”
The results are relevant for most high-income countries, the researchers said. The shift in taxes they propose would result in some foods becoming more expensive and others cheaper, sheltering lower income householders. This could well make the policy more attractive to both the public and government, the team explained.
The fact that the suggested tax reform is also cost-neutral for the central government also improves the chances of implementation, said Jörgen Larsson, researcher at Chalmers University of Technology, who led the study. “In the long term, a food tax shift would benefit central government economically through better public health, reduced sick leave, and lower costs for health care,” he said.
The study focused on four food groups: fruits, vegetables, legumes; whole grain products; beef, lamb, pork and processed meat; and sugar-sweetened beverages.
These were selected because of the robust scientific evidence for their effects on health or the climate – for example reduced consumption of beef and lamb resulting in lower greenhouse gas emissions. High consumption of other foods, meanwhile, would “mainly have healthy-promoting effects”, they explained.
In their modelling, VAT was removed for fruit, vegetables, legumes and whole grain products, and levies were added on sugar-sweetened beverages, beef, lamb, pork and processed meat.
The removal of VAT would reduce the price level of the products by almost 11%, leading to an increase in consumption of 10% for whole grain bread and 4% for fruit and vegetables. The levy on sugar-sweetened beverages would increase the price by around 17%, which the researchers estimated would reduce consumption by “about a quarter”.
The biggest difference for Swedish consumers would be in the prices of beef and lamb, where the tax shift would mean a price increase of around 25%, or almost €3 per kilo (£2.64). They estimated this would reduce meat consumption by 19%, which is back to the same level as the 1990s.
“Not everyone needs to become vegetarian for the sake of the climate, but with more moderate consumption, a lot stands to be gained,” Larsson added.
