Summary
This integrated economic, health and environmental modelling study demonstrates that fiscal reform of value-added tax rates on foods—specifically reducing rates on fruits and vegetables whilst increasing rates on meat and dairy—can simultaneously deliver health, environmental and economic benefits across most European countries. Health gains were primarily driven by increased fruit and vegetable consumption following VAT reductions, whilst environmental and revenue benefits were predominantly driven by VAT increases on animal products. The findings suggest that differentiated VAT policy is a feasible policy lever to encourage shifts towards healthier and more sustainable food systems in Europe.
UK applicability
The United Kingdom's VAT system currently provides zero-rating for most fresh foods, limiting the policy levers available compared to other European countries with reduced rates. However, the study's methodology and conclusions regarding the potential of fiscal incentives could inform discussion around future food policy reform, particularly regarding processed foods and animal products which currently incur standard VAT rates.
Key measures
Health improvements (dietary changes), environmental benefits (greenhouse gas emissions, land use, water use), economic outcomes (tax revenue), diet quality metrics
Outcomes reported
The study modelled the health, environmental and economic impacts of reforming VAT rates on foods across European countries. It quantified the effects of reducing VAT on fruits and vegetables whilst increasing VAT on meat and dairy products.
Topic tags
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