Cost-neutral food tax reforms for healthier and more sustainable diets

Journal article, 2026

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 strict 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.