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GTAP Resource #6924

"Aligning value-added taxes on food with health and environmental considerations – two case studies for the UK and Germany"
by Springmann, Marco and Florian Freund


Abstract
Diets in most high-income countries are both unhealthy and unsustainable. Fiscal incentives are seen as important policy measure for incentivising dietary changes to healthier and more sustainable diets. However, some fiscal incentives such as introducing new tax schemes face political resistance. Adjusting value-added taxes on foods important for health and environmental impacts could offer an alternative route to providing fiscal incentives without introducing new tax schemes.

Here we analyse the impact of increasing VAT rates on meat, a food group with high health and environmental impacts, and of reducing VAT rates on fruits and vegetables, food groups with beneficial health and low environmental impacts. We focused on two country cases studies, the UK and Germany. For the economic analysis, we used the Modular Applied General Equilibrium Tool (MAGNET) and coupled this to a comparative risk assessment of dietary risks and a life-cycle assessment of environmental impacts.

Our results indicate that VAT reform could provide fiscal incentives for dietary change with clear health and environmental benefits. We identified potential health impacts of abolishing preferential VAT treatment of meat products that range between 2,440-3,390 avoidable diet-related deaths in the UK and Germany, and emissions reductions of 4-7 MtCO2eq. The magnitude of impacts is comparable to those from levying a carbon price of about 50 USD/tCO2eq on foods. Our findings suggest that VAT reform might offer a suitable and effective second-best policy lever for encouraging dietary changes towards healthier and more sustainable diets.


Resource Details (Export Citation) GTAP Keywords
Category: 2023 Conference Paper
Status: Not published
By/In: Presented during the 26th Annual Conference on Global Economic Analysis (Bordeaux, France)
Date: 2023
Version:
Created: Springmann, M. (4/14/2023)
Updated: Springmann, M. (4/14/2023)
Visits: 829
- Climate change policy
- Environmental policies
- Domestic policy analysis
- Health
- Europe (Western)
- European Union


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