In the last post, Christopher Snowdon, Head of Lifestyle Economics at the Institute of Economic Affairs, wrote a piece arguing against the idea of a meat tax, from an economic viewpoint rather than for vegetarian reasons. Here Marco Springmann, Senior Researcher on Environmental Sustainability and Public Health at the University of Oxford, covers the counter argument.

Taxing meat to pay for its healthcare bill

A health tax on red and processed meat could prevent more than 220,000 deaths and save over US$40 billion in healthcare costs every year, a new study from the Oxford Martin School at the University of Oxford finds.

Why tax red and processed meat?

Three years ago, the cancer agency of the World Health Organisation classified the consumption of red meat, which includes beef, lamb, and pork, as carcinogenic to humans if eaten in processed form – think of sausages, bacon, and jerky – and as probably carcinogenic if eaten unprocessed. In addition, the consumption of red and processed meat has also been associated with increased rates of coronary heart disease, stroke, and type 2 diabetes.

These negative health impacts raise the question whether the consumption of red and processed meat should be regulated similar to other carcinogens, such as tobacco or asbestos, or to other foods of public health concern, such as sugary drinks.

In a new study, colleagues from the International Food Policy Research Institute in the US, the Nuffield Department of Population Health at the University of Oxford in the UK, and I analysed one of the least intrusive ways of regulating red and processed meat consumption: we calculated so-called optimal tax levels that would account for the health costs of red and processed meat. Consumers would still have the choice to eat red and processed meat, but they would have to contribute to paying for treating the chronic diseases its consumption is assumed to cause.

What did we find?

Sausages, bacon, jerky, and other processed meats would have to double in price to account for their health costs in high-income countries, and the prices for unprocessed beef, lamb and pork would have to increase by 20%.

The health taxes differ by region, because they factor in the health and economic burden of red and processed meat consumption in a specific region. High-income countries, such as the UK and the US consume about double the global average and spend more money treating the associated chronic diseases, whereas low-income countries consume less than half the global average and also spend less money treating meat-related diseases. As a result, the health taxes calculated based on the theory of optimal taxation would be high in high-income countries and low in low-income countries.

For example, the health taxes on sausages in Germany and bacon in the US would increase their prices by a whopping 160%, whereas prices for processed meat in China would have to increase by 40%, and those in Ethiopia by less than 1%. Due to its relatively modest healthcare spending, the UK is somewhere in the middle with an 80% increase.

Health and economic implications

Like taxes on other products that can harm health including alcohol, tobacco and sugar, a health tax on red and processed meat could encourage consumers to make healthier choices. The results suggest if the health taxes were introduced, consumption of processed meat would decline by about two portions per week in high-income countries and by 16% globally, while unprocessed red meat consumption would remain steady, due to consumers substituting it for processed meat.

Tax revenues would amount to US $172 billion globally and cover 70% of the health costs that red and processed meat consumption puts on society. To fully cover the costs, the health taxes would have to be doubled and, in high-income countries, increase to 200% for processed meat.

Reduced consumption of processed meat could also have positive knock-on effects on climate change and body weight. We found it could reduce global greenhouse gas emissions by over one hundred million tonnes, mainly due to lower beef consumption. And it also reduced levels of obesity in our analysis by driving consumers to lower-calorie substitutions.

Our findings make it clear that the consumption of red and processed meat has a cost, not just to people’s health and to the planet, but also to healthcare systems and the economy. Governments don’t need to tell people what they can and can’t eat, but they have a responsibility to encourage the adoption of healthy and sustainable diets. Making sure the health costs of foods are reflected in their prices is an important component of that.

Why we need to tax red and processed meat

There are several reasons for why one would want to tax red and processed meat. The first one relates to health and the World Health Organisation classifying the consumption of red meat as carcinogenic to humans if eaten in processed form, and as probably carcinogenic if eaten unprocessed. Mechanistic evidence indicates several compounds that are found in all types of red and processed meat are responsible, no matter the quality of the cut.

What’s more, in relation to the association between the consumption of red and processed meat and increased rates of coronary heart disease, stroke, and type 2 diabetes, we estimated that 38,000 chronic-disease deaths in the UK can be attributed to red and processed meat consumption.

Governments have the responsibility to protect the public from exposure to harmful products, which is why other carcinogens, such as tobacco and asbestos, and other foods of public health concern, such as sugary drinks, are regulated. One of the least intrusive ways of regulating exposure is to tax the product in question. That would not limit choice, but encourage consumers to switch to healthier alternatives. About 6,000 deaths from chronic diseases could be avoided in the UK if red and processed meat was appropriately taxed, according to our estimates.

In addition to this public health rationale, there is the public finance one. We calculated that in 2020, £4.8 billion will be spent in the UK on treating chronic diseases related to red and processed meat consumption. This amount will come from all of us through our tax contributions used to fund the NHS, as well as from family members and friends who often provide unpaid care. Thus, consuming red and processed meat is not only a personal lifestyle choice, but also puts pressure on our health system and the economy.

A fairer approach would be if those who want to consume red and processed meat would pay the full cost associated with its consumption, including healthcare costs. We estimated that for the UK, such a risk premium would increase the price for processed meat by 80% and for unprocessed red meat by 14%. Taxing red and processed meat in that way would send a strong signal not only to consumers, but also to businesses to change what is on offer.

Our estimates make clear that the consumption of red and processed meat has a cost, not just to one’s personal health, but also to the healthcare systems and the economy. Governments don’t need to tell people what they can and can’t eat, but they have a responsibility to encourage the adoption of healthy and sustainable diets, and setting the right price incentives is an important part of that.

Additional notes:

Another reason for taxing meat is climate change. Beef and other animal products are major emitters of greenhouse gases that are changing our climate. Accounting for the climate damages of meat emissions could add another 10-40% to its price, according to earlier estimates.