Food has become a central factor in the environmental impact in Europe and explains a significant part of the emissions generated by households, so environmental VAT could be very helpful.
In this scenario, meat consumption concentrates a high portion of greenhouse gases, in addition to putting pressure on water use, soil, and biodiversity.
Therefore, researchers from the Potsdam Institute for Climate Impact Research in Germany propose reviewing the fiscal incentives that currently make these products cheaper.
A price signal to reflect hidden costs
The proposal is based on a simple principle: incorporate the environmental costs associated with food production into the final price.
However, applying a detailed environmental tax to each product is complex due to the diversity of food chains.
Given this difficulty, the study analyzes an immediate option: eliminating the reduced rates of the Value Added Tax applied to meat.
The role of VAT in consumption habits
Currently, in the European Union many foods pay a reduced VAT, as is the case in countries like Germany or Spain.
In 2023, 22 of the 27 member states applied this tax benefit to meat, despite its high environmental impact.
According to the models used, bringing meat to the general VAT rate would allow reducing the environmental damage of the diet by between 3% and 6%.
Economic impact and social compensation
The fiscal adjustment would imply an average increase in annual food expenditure of about 109 euros per household in the European Union.
However, this increase would be partially offset by higher tax revenues, estimated at 83 euros per household.
Thus, the final net cost would be around 26 euros annually, with room to apply mechanisms of social compensation.
A second scenario: differentiated environmental taxes
In addition to VAT, the study evaluates a more ambitious scenario based on an environmental tax linked to the emissions of each food.
A general surcharge equivalent to 52 euros per ton of CO₂ would allow reducing emissions to a level similar to that of full VAT on meat.
This value is close to the carbon price expected for fuels and heating in the European Union by 2028.
Beyond climate: other positive impacts
A comprehensive price signal would not only reduce greenhouse gases but also other relevant environmental impacts.
These include nitrogen and phosphorus pollution, intensive water consumption, and pressure on ecosystems.
Thus, the approach would allow for a broader address of the environmental limits of the European food system.
Possible advantages of the initiative
Among the main advantages is the rapid reduction of the environmental impact of the diet without direct prohibitions.
Additionally, the scheme generates fiscal resources that can be used to compensate the most vulnerable households.
Finally, the measure sends a clear signal to the market, encouraging more sustainable production systems aligned with the climate goals of the European Union.
