Meat could be the next tobacco as governments look to ‘sin taxes’ as a solution to climate change

Don’t have a cow, man
  • With tobacco and sugar taxes having gone mainstream around the world, the price of red meat could soon also be hiked with new taxes, new research from ratings house Fitch Solutions suggests. Such a measure would help fight a myriad of health problems as well as reducing the carbon emissions and deforestation produced by agriculture.
  • It comes after a cross-section of German politicians last week proposed sharply increasing the tax on meat from 7% to 19% to do just that.
  • With similar policies already proposed in Sweden and Denmark, Fitch stated: “The global rise of sugar taxes makes it easy to envisage a similar wave of regulatory measures targeting the meat industry”.

First, the taxman came for your cigar. Now he might be coming for your steak.

That’s according to a new report out from research firm Fitch Solutions which has concluded that “sin taxes” — levies on products deemed undesirable like tobacco and sugary food and drinks — could soon be applied to meat.

“Governments could leverage on this demand for more sustainability and tax the consumer instead of implementing stricter environmental production regulations,” it first suggested in May.

It’s since doubled-down in new research predicting such a tax could go global, due to environmental, health risk and ethical concerns, spreading around the world just as sugar taxes have in recent years.

“The global rise of sugar taxes makes it easy to envisage a similar wave of regulatory measures targeting the meat industry,” Fitch said in a note supplied to Business Insider Australia.

Just last week, a whole coalition of cross-party German politicians proposed hiking the value-added tax (VAT) on meat from 7% to 19% to cut consumption.

Like sugar, processed and red meat has been linked to increased risk of cancer, heart disease, stroke and diabetes, which Fitch said laid the groundwork for similar taxes. A University of Oxford study for example found introducing the measure could prevent almost 6,000 deaths a year and save nearly £700m in healthcare costs.

“A meat tax could, therefore, emerge as a policy sibling to the sugar tax, supported on the basis that meat does play a role in a balanced diet but over-consumption is a public health issue,” it concluded.

Unlike sugar, however, the justification for restricting people’s appetite for meat relates to broader issues than just health, with climate change, deforestation, and ethical concerns all looming large in the minds of consumers.

It comes hot on the heels of a UN report which found that the human food system accounts for 37% of all greenhouse-gas emissions.

The production of meat — and especially red meat — is responsible for much of that. A 2011 study found that lamb, followed by beef, are by far the worst offenders.

The carbon production of different foods Environmental Working Group (EWG) and CleanMetrics

Those concerns have supported the growing uptake of meat-free diets. Meat alternatives have begun going mainstream, companies like Beyond Meat enjoying considerable success.

“We are already witnessing consumers cut back on red meat across a number of developed markets globally, supported by the increasing popularity of vegan, vegetarian and ‘flexitarian’ diets. Younger, urbanised consumers are the main drivers of meat-free diets, suggesting that this will be a long-term trend,” Fitch said.

Source: National Statistics, Fitch Solutions

“Introducing a tax on meat would likely accelerate this trend, encouraging consumers to moderate consumption of red meat by switching to poultry or plant-based proteins.”

It remains to be seen however whether Australia would get on the bandwagon. For one, a sugar tax never took off in Australia. For another, any measure that could potentially hurt farmers, already under pressure from drought, would be met with significant opposition.

Other nations may find it easier. Despite once being considered a fringe policy issue, sugar taxes certainly managed to spread around the world to countries as different as the UK, Mexico and Dubai — where the tax is a whopping 50%.

A meat tax could similarly raise prices to the point where consumption falls. According to the World Health Organisation (WHO), taxes that hike the price of sugary drinks by 20%, reduce consumption by around the same amount.

If taxes were as successful at constraining the global appetite for meat, the reduction in carbon emissions could be enormous.

A recent found that if the United States went meatless, it would be the equivalent of taking 60 million cars off the roads.

Source: USDA, Fitch Solutions

However, Fitch tipped cold water on that idea. It stated that it was “highly unlikely” that meat-lovers like the US and Brazil would use taxes to banish meat from menus.

Looks like China better get a moove on then.