A team led by the Oxford Martin School and the Environmental Change Institute has explored the potential of adjusting Value Added Taxes (VAT) to promote healthier and more sustainable dietary choices in the UK and across European nations. Their study, published in Nature Food, proposes that applying full VAT rates to meat and dairy products while exempting fruits and vegetables could have a positive impact on dietary health, environmental sustainability, and even government revenues.
The research suggests that such VAT adjustments could lead to increased consumption of fruits and vegetables by approximately one portion per week while reducing meat and dairy intake by a similar margin. Specifically, in the UK, where basic food items typically enjoy a zero VAT rate, the consumption of meat and dairy could decrease by up to two portions each.
Data gathered on current VAT rates from the UK and the EU served as the foundation for the study's economic, environmental, and health impact assessments. The findings indicate that the proposed VAT reforms could significantly benefit public health by reducing diet-related diseases, resulting in 170,000 fewer deaths across the UK and EU, with more than 2,000 fewer deaths in the UK alone.
Furthermore, the environmental benefits of such dietary changes include a reduction of over 50 million tons of carbon dioxide equivalent in greenhouse gas emissions and a decrease in demand for agricultural land by more than 70,000 km². For the UK, this translates to a reduction of 16 million tons of emissions and the liberation of over 20,000 km² of land from agricultural use, alongside a decrease in water pollution.
Despite these dietary shifts, the study found that the overall cost to consumers would remain consistent, as the higher-priced meat and dairy products are replaced with more affordable fruits and vegetables. Additionally, the adjustment in VAT rates is anticipated to generate increased government revenues, estimated at US$45 billion, or 0.2% of GDP, with the UK seeing a revenue increase of 0.6% of GDP.
Professor Marco Springmann, the study's lead author, emphasized the need for a modernized tax system that addresses the health and environmental challenges posed by the current food system. He advocates for VAT rate adjustments based on health and environmental impacts as a comprehensive policy solution that benefits public health, the environment, and government finances.
Source: Oxford Martin