A recent study from the Oxford Martin School and the Environmental Change Institute suggests that reforming the Value Added Tax (VAT) system on foods, based on health and environmental factors, could make healthier and more sustainable diets more affordable and accessible.
In many countries, including the UK and across Europe, VAT rates on food items are often reduced without clear reasoning. The Oxford-led team’s study, published in Nature Food, proposes that applying full VAT rates to meat and dairy while zero-rating fruits and vegetables could drive significant changes in both dietary habits and environmental impact.
According to the findings, reducing VAT on fruits and vegetables could encourage individuals to consume about one extra portion per week, while levying standard VAT on meat and dairy could reduce intake by a similar amount. In the UK, where many staple foods are zero-rated, applying full VAT to meat and dairy could lead to a reduction of up to two portions per week for consumers.
The researchers analyzed VAT data from the UK and the European Union (EU) and assessed the potential effects of altering tax rates through health, environmental, and economic lenses. They found that such adjustments could have significant benefits:
Public Health Impact: Increased consumption of fruits and vegetables, coupled with reduced meat and dairy intake, could lead to a decrease in diet-related diseases such as heart disease, stroke, cancer, and diabetes. The researchers estimate that these changes could prevent 170,000 deaths annually across the UK and EU—equivalent to 330 fewer deaths per million people per year. In the UK alone, the reform could prevent over 2,000 deaths.
Environmental Benefits: VAT reform could reduce greenhouse gas emissions by over 50 million tonnes of CO2 equivalent across the UK and EU—roughly the emissions of Scotland and Northern Ireland combined. In the UK, emissions would fall by 16 million tonnes, about half the emissions of London.
Agricultural Land Use: The shift in dietary patterns would also decrease demand for agricultural land. The UK and EU could free up over 70,000 km² of land, approximately the size of the Republic of Ireland, even with an increase in fruit and vegetable production. In the UK alone, this would amount to freeing more than 20,000 km² of land, the equivalent of Wales, while reducing water pollution by 10%.
The study also found that the cost of these dietary changes would be neutral for consumers, as savings from reduced meat and dairy consumption would offset the costs of increased fruit and vegetable intake.
On the economic side, the researchers note that this shift in VAT policy could generate substantial additional revenues for governments. The estimated increase in tax receipts amounts to $45 billion across the UK and EU—equivalent to 0.2% of GDP. In the UK alone, tax revenues could rise by 0.6% of GDP.
Professor Marco Springmann, senior researcher at the Environmental Change Institute and lead author of the study, emphasized the urgency of reforming food tax systems to address pressing health and environmental challenges. He argued that adjusting VAT rates based on the health and environmental impacts of food would deliver substantial public health benefits, environmental improvements, and increased government revenue, all without burdening consumers.
“This modern tax system would be a win-win, helping both public health and the environment, while also benefiting government finances,” Professor Springmann concluded.
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