Tax reform found to boost nutrition and climate health at no extra grocery cost

A new study in Sweden has found that food taxes can bring environmental and human health benefits without raising the average grocery bill. 

Researchers at Chalmers University of Technology say food taxes could potentially prevent 700 premature deaths among people under 70 each year in the nation. 

“This high figure surprised us, and yet it is a conservative estimate. There is also a lot of suffering associated with unhealthy diets that is not apparent in this figure, such as living with obesity or type 2 diabetes,” says lead researcher Jörgen Larsson at Chalmers University of Technology.

The researchers have proposed removing VAT on fruit, vegetables, legumes, and whole grain products and introducing levies on sugar-sweetened beverages, beef, lamb, pork, and processed meat.

Diet impacts human and climate health

The publication in Ecological Economics warns that unhealthy diets cause as many deaths as smoking and many more than alcohol consumption. Furthermore, these diets have a significant environmental impact — in Sweden, this is twice the direct emissions from all Swedish passenger car traffic.

“Today’s diets are making us sick and negatively impacting the climate. If we want to do something about this collectively, taxes and subsidies are a good way forward,” says Larsson.

“Our research also shows that this can be done without the average trip to the supermarket for groceries becoming more expensive when selective taxes on certain food groups are compensated by removing VAT on other food groups.” 

The researchers add that food taxes would reduce Swedes’ climate footprint by roughly 700,000 metric tons of CO2 equivalents per year — equivalent to removing 8% of emissions from all cars in Sweden.

A recent cross-sectional study showed that ultra-processed food consumption is negatively related to carbon footprint awareness and sustainable, healthy eating behaviors. It called for stronger awareness of these factors to inform strategies targeting UPFs.

Call for economic incentives 

The researchers note that policies currently rely on dietary guidelines. However, as the EU Commission’s advisory body, Science Advice for Policy by European Academies advises, more economic incentives can be used to encourage healthier diets.

Researchers say restructured food taxes could make healthy, sustainable diets more affordable.The study examined how such incentives could be practiced and what impact a food tax shift may have. Although the research was focused on Sweden, the researchers believe it applies to most high-income countries. 

It found that the tax shift would be cost-neutral for low- and high-income earners, as some foods would be cheaper and others more expensive, which may be more acceptable to people. The calculations were based on Sweden’s current VAT levels.

The researchers stress that price alterations have a significant impact on what consumers choose to buy. 

VAT removal would lower the price level of these products by nearly 11%, such as 10% for whole grain bread and 4% for fruit and vegetables, leading to increased consumption.

On the other hand, a levy on sugar-sweetened beverages would raise prices by around 17%, which would reduce consumption by a quarter, according to the study.

The largest price hike would be for beef and lamb, where a tax shift would raise prices by roughly 25%, reducing meat consumption by 19%.

“While it might seem to be a big price increase, it would also lead to a decrease in meat consumption in Sweden by one-fifth, thus returning meat consumption to the same level as in the 1990s. Not everyone needs to become vegetarian for the sake of the climate, but with more moderate consumption, a lot stands to be gained,” says Larsson.

A new Swedish study suggests shifting taxes toward climate-friendly foods without raising grocery costs.The WHO recently advocated food taxes as an evidence-based and effective way to promote healthy diets. Its new policy brief argued that current food taxes are too narrow, often targeting just one ingredient like sugar. Since sugar is only a small part of food prices, companies can change recipes, or people can swap products to avoid taxes, which weakens their impact.

Following the EAT Lancet advice

The study suggests removing VAT from foods that should be consumed more, as advised by the recently released EAT Lancet report. Researchers also calculated the effects of levies on certain foods on the climate.

They focused on four food groups: fruits, vegetables, and legumes; whole grain products; beef, lamb, pork, and processed meat; and sugar-sweetened beverages.

Furthermore, the researchers are aware that food prices usually hit low-income workers hard, as a large portion of their income goes into food. They believe the proposed tax shift will benefit the public, as some things will be cheaper and some more expensive.

“That the reform is also cost-neutral for the central government also improves the chances of its implementation. In the long term, a food tax shift would benefit the central government economically through better public health, reduced sick leave, and lower costs for health care,” Larsson concludes.

The study was carried out by researchers from Chalmers University of Technology, Karolinska Institutet, and the Swedish University of Agricultural Sciences.