London – There’s a good chance that meat will be taxed in the next five to ten years in an effort to fight global challenges such as climate change, deforestation, antibiotic resistance and obesity, finds a new report.
So-called “sin taxes” are nothing new. Countries have long been taxing goods deemed to be unhealthy or damaging to the environment or both. For example, over 180 countries now impose a tax on tobacco, 60 jurisdictions tax carbon and at least 25 tax sugar, according to the report The Livestock Levy.
Produced by the investor network Farm Animal Investment Risk and Return (FAIRR) for investors managing more than $4 trillion of assets, the report argues that meat is very likely to follow the same path as tobacco, carbon and sugar towards a tax in an effort to cut consumption.
“If policymakers are to cover the true cost of human epidemics like obesity, diabetes and cancer, and livestock epidemics like avian flu, while also tackling the twin challenges of climate change and antibiotic resistance, then a shift from subsidization to taxation of the meat industry looks inevitable,” Jeremy Coller, the founder of FAIRR and the chief investment officer at the private equity firm Coller Capital, told the Guardian.
Meat taxes are already on the agenda in Denmark, Sweden and Germany. Even though none of these proposals have advanced into actual legislation, the analysis points out that long-term investors should take note of what’s happening there, especially as the Nordic countries were the first to introduce a carbon tax in 1990.
The arguments in favour of a meat tax are compelling. Population growth has driven up global meat consumption by over 500 per cent between 1992 and 2016, a trajectory that is likely to continue in the future, especially in emerging markets.
But this massive growth the global livestock industry has been linked to a range of environmental, health and social problems. For instance, meat consumption is now producing greenhouse gas emissions that exceed those from the transport sector. It is also connected to global food insecurity, reduced water availability, soil degradation and deforestation.
In terms of its health effects, meat consumption is linked to an increasing incidence rate of global obesity and associated high risks of type 2 diabetes and cancer. It is also contributing to rising levels of antibiotic resistance.
While meat taxations is not a short-term risk for investors, large pension funds and asset managers would do well to put it on their agenda, according to the report.
“Far-sighted investors should plan ahead for this day,” said Coller.