Cost-Neutral Food Tax Reforms for Healthier and More Sustainable Diets

27 Pages Posted: 23 Dec 2024

See all articles by Jörgen Larsson

Jörgen Larsson

Chalmers University of Technology

Liselotte Schäfer Elinder

Independent

Jonas Nässén

Chalmers University of Technology - Division of Physical Resource Theory

Edvin Månsson

Chalmers University of Technology - Department of Space, Earth and Environment

Elin Röös

Swedish University of Agricultural Sciences (SLU)

Sarah Säll

Swedish University of Agricultural Sciences (SLU)

Emma Ejelöv

Chalmers University of Technology - Division of Physical Resource Theory

Emma Patterson

Karolinska Institutet - Department of Global Public Health

Multiple version iconThere are 2 versions of this paper

Date Written: December 19, 2024

Abstract

This study evaluates cost-neutral food tax reforms integrating climate and health objectives, compared with strictly climate-and health-focused reforms. Results indicate that a strict climate-focused reform risks negative health outcomes, while the health-focused reform achieves only 40% of the climate benefit of the integrated reforms and adversely impacts animal welfare. Integrated tax reforms, however, could reduce Sweden's food carbon footprint by an amount equivalent to an 8% reduction in passenger car emissions, alongside co-benefits such as decreased pesticide and fertilizer use and lower ammonia emissions. In addition, the healthier diets simulated as a result of the integrated reforms are estimated to save more than twice as many lives as those lost to road traffic fatalities. Furthermore, the strict climate-and health-focused reforms lead to higher food costs, disproportionately affecting low-income groups. The integrated reforms were designed to be cost-neutral by applying subsidies in the form of VAT exemptions on healthy foods or through the redistribution of tax revenues to all citizens. This study demonstrates that it is possible to design food tax reforms to achieve substantial environmental and health improvements while avoiding additional financial burdens on consumers, suggesting a promising pathway for policy development.

Keywords: Climate policy, Health policy, Food policy, Tax reform, Price elasticity, Distributional effects, Lump-sum redistribution

Suggested Citation

Larsson, Jörgen and Schäfer Elinder, Liselotte and Nässén, Jonas and Månsson, Edvin and Röös, Elin and Säll, Sarah and Ejelöv, Emma and Patterson, Emma, Cost-Neutral Food Tax Reforms for Healthier and More Sustainable Diets (December 19, 2024). Available at SSRN: https://ssrn.com/abstract=5065746 or http://dx.doi.org/10.2139/ssrn.5065746

Jörgen Larsson (Contact Author)

Chalmers University of Technology ( email )

Gothenburg
SE-412 96 Goteborg
Sweden

Jonas Nässén

Chalmers University of Technology - Division of Physical Resource Theory ( email )

Gothenburg
Sweden

Edvin Månsson

Chalmers University of Technology - Department of Space, Earth and Environment ( email )

Elin Röös

Swedish University of Agricultural Sciences (SLU) ( email )

Sarah Säll

Swedish University of Agricultural Sciences (SLU) ( email )

Emma Ejelöv

Chalmers University of Technology - Division of Physical Resource Theory ( email )

Emma Patterson

Karolinska Institutet - Department of Global Public Health ( email )

Sweden

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