Meat taxes in Europe can be designed to avoid overburdening low-income consumers

Consumption taxes on meat have recently been under consideration in several European countries as part of their effort to achieve more sustainable food systems. Yet a major concern is that these taxes might burden low-income households disproportionately. Here we compare different meat tax designs and revenue recycling schemes in terms of their distributional impacts in a large sample of European countries. We find that across all selected tax designs, uncompensated meat taxes are slightly regressive. However, the effect on inequality is mild and can be reversed through revenue recycling via uniform lump-sum transfers in most cases. Using meat tax revenues towards lowering value-added taxes on fruit and vegetable products dampens but does not fully offset the regressive effect. Variation in the distributional impact can be explained by cross-country heterogeneity in consumption patterns, design choices between unit-based and ad valorem taxation and differentiation according to greenhouse gas intensities. Taxes are increasingly used to disincentivize the consumption of specific food products associated with negative impacts for health and the environment. This study compares the distributional effects of different tax designs and revenue recycling mechanisms for taxing meat products across the European Union and United Kingdom.

Automated summary

Consumption taxes on meat have been considered in European countries to achieve sustainable food systems, but concerns about the burden on low-income households exist. This study compares different meat tax designs and revenue recycling mechanisms and finds that meat taxes are slightly regressive, but can be mitigated through revenue recycling. Lowering value-added taxes on other food products using meat tax revenues can also dampen the regressive effect.