A reform of value-added taxes on foods can have health, environmental and economic benefits in Europe

Summary

This integrated economic, health and environmental modelling study demonstrates that differentiated value-added tax rates on foods—specifically reducing VAT on fruits and vegetables whilst increasing rates on meat and dairy—can simultaneously improve dietary quality and deliver health, environmental and economic benefits across most European countries. The analysis exploits the existing policy space created by current non-zero but reduced VAT rates on health and environmentally relevant foods in Europe. The findings suggest that fiscal policy instruments represent a tractable mechanism for incentivising dietary shifts aligned with both public health and climate mitigation objectives.

UK applicability

The United Kingdom operates a distinct VAT system outside the EU VAT Directive framework; however, the underlying policy logic—using differentiated food taxation to encourage healthier and more sustainable dietary choices—is directly applicable to UK food policy reform. Current UK VAT exemptions on most fresh produce and zero-rating of most foods mean the fiscal levers differ from those modelled for mainland Europe, but similar comparative analysis of UK-specific tax structures could support alignment with health and climate policy goals.

Key measures

Health improvements (likely measured via disease burden or dietary quality metrics), environmental benefits (likely greenhouse gas emissions or resource use), economic outcomes (VAT revenue and dietary spending changes), dietary changes across European countries

Outcomes reported

The study modelled the health, environmental and economic impacts of reforming value-added tax rates on foods across European countries. It quantified dietary improvements, greenhouse gas emission reductions, and fiscal revenue effects resulting from increased VAT on meat and dairy and reduced VAT on fruits and vegetables.

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