A meat tax can be environmentally friendly without affecting the poor

Our current agriculture is not sustainable. We’re using too much land, too much water, and producing too many emissions. The meat industry is one of the biggest environmental culprits of agriculture. Almost invariably, meat production uses up more resources inefficiently so if you want to start somewhere, meat is one of the best places to do so.

An idea that keeps popping up is that of a meat tax. Basically, you’d tax meat for the negative environmental effect it has. That’s not as crazy as it sounds — after all, we tax things like alcohol and tobacco for their negative health effects, and we also tax plastic bags for their negative environmental impact. But one big argument against a meat tax is that it would disproportionately affect the less affluent part of the population who depend on meat.

But a new study says otherwise. If we cleverly design our meat tax, researchers say, we could protect the environment and those with lower incomes.

The Environmental Cost of Meat

The environmental impact of meat consumption is well-documented. Meat and dairy production together account for over 60% of our emissions, but produce way less calories and protein. There’s a mountain of research showing that replacing some of the meat in our diets with other types of foods can make a big difference.

“Current environmental, health and social costs of global livestock systems are significant, but there is room to implement interventions that can protect both economic and environmental objectives,” said Mario Herrero, professor in the Department of Global Development and director of the Food Systems & Global Change program in the College of Agriculture and Life Sciences, who co-authored the report. “Novel alternatives to animal-sourced foods can potentially play an important role in shifting our food systems in ways that are more sustainable, healthier and less harmful to animals, humans and the planet.”

The journey starts with understanding why meat is in the environmental spotlight. Meat production is a significant contributor to greenhouse gas emissions, deforestation, and biodiversity loss. The study was focused on the European Union, which is characterized by high per capita meat consumption.

The research team scrutinized various tax scenarios. Basically, they looked at ways to get people to eat less meat or to get people to eat more vegetables.

1. Various Tax Scenarios:
   • Ad Valorem Taxes: These are taxes based on the value of a product or service. For example, a percentage of the price of an item.
   • Emissions-Based Taxes: Taxes levied on the amount of greenhouse gases or pollutants emitted by a product or process. This is often used as a tool to discourage environmentally harmful practices.
   • Unit Taxes: These are taxes charged per unit of a product or service, regardless of its value. For instance, a fixed tax per liter of gasoline.
2. Methods of Revenue Recycling:
   • Uniform Lump-Sum Transfers: This involves redistributing the tax revenue equally among all individuals, regardless of their income or tax contribution. It’s a way to ensure that the tax doesn’t disproportionately burden lower-income individuals.
   • VAT Reductions on Fruits and Vegetables: This method would involve using the tax revenue to reduce the Value-Added Tax (VAT) on healthy foods like fruits and vegetables. The idea is to make healthier food options more affordable and encourage better dietary habits.

Tax Design and Its Implications

The study reveals that uncompensated meat taxes, regardless of their design, tend to be regressive — impacting lower-income households more. This is not what you want.

However, this regressivity can be mitigated, or even reversed, through thoughtful revenue recycling. The analysis highlights that using meat tax revenues to lower VAT on fruits and vegetables or redistributing them as uniform lump-sum transfers can significantly lessen the tax’s regressive nature.

A crucial aspect of the study is its recognition of cross-country variations. Basically, different countries have different consumption patterns — and the meat tax should account for this. For instance, consumers in Southern Europe tend to spend more on beef, a highly resource-intensive meat, while Eastern Europeans prefer pork. These differences influence the effectiveness and equity of different tax designs.

Furthermore, the study considers consumer responses to price changes, acknowledging that low-income households might be more sensitive to meat price increases.

Policy Implications: Crafting Fair and Effective Meat Taxes

The implications of this research are profound for policymakers. The study provides a blueprint for designing meat taxes that align with environmental goals without exacerbating social inequalities. It suggests that ad valorem taxation, combined with strategic revenue recycling, can strike a balance between environmental and equity objectives. However, the complexity of implementing such policies, including varying VAT regulations across the EU and administrative challenges, cannot be overlooked.

As Europe navigates towards a more sustainable future, the conversation around meat taxation will likely intensify. The study offers a valuable framework for understanding the intricate relationship between environmental policies and social equity. It’s a reminder that the path to sustainability is not just about environmental considerations but also about ensuring that the journey is equitable for all members of society.

The study was published in Nature.