Health, Environment Advocates Bullish on Meat Taxes

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By Michael J. Bologna

Hamburger addicts, barbecue junkies, and fried chicken fanatics may soon be asked to pay a surcharge for their love of meat.

Excise taxes on beef, pork, and chicken could be the next big thing in a state and local tax environment that’s already comfortable with “sin tax” regimes aimed at cigarettes, alcoholic beverages, and gambling and is adapting quickly to special levies on sugar-sweetened beverages, greenhouse gases, and marijuana.

While there are no current legislative proposals imposing state or local surcharges on meat, a growing number of public health, environmental, and animal rights advocates are bullish on tax schemes addressing the mounting social costs of meat production and consumption.

“We have never been closer to a meat tax,” said Ashley Byrne, associate director of campaigns for People for the Ethical Treatment of Animals (PETA). “We have seen people—including meat eaters—realizing that meat is bad for their health and meat is taking this incredible toll on the environment. People seem more open than ever to an excise tax on meat. If we are going to tax tobacco, if we are going to tax soda, it absolutely makes sense to have a similar tax on meat.”

Such activism hasn’t escaped the notice of tax practitioners and investment managers, who are warning their constituencies to prepare for a future in which meat eaters are asked to pay a premium.

“Taxation at its core is about raising revenue, but it’s also about social policy,” said Stephen Blazick, a state and local tax partner with Reed Smith LLP in Philadelphia. “Meat taxes are probably not a concern for the immediate future in the United States, but with the perceived health effects of significant meat consumption and the arguable impacts on the environment in terms of increased greenhouse gases, meat taxes could be a source of revenue in the future.”

Lori Stolly, a state and local tax director with Grant Thornton LLP, predicted a spotted landscape of state and local meat taxes within five years and added, “the environment might be right for at least one state to introduce a meat tax this year.”

Negative Social Impacts

The global investment community received a stern warning about the future of meat in December 2017 when Farm Animal Investment Risk & Return (FAIRR), a London-based investor network managing $4 trillion in assets, released a whitepaper report entitled “The Livestock Levy.” The report pointed to mounting research showing negative health, environmental, and social impacts associated with the production and consumption of meat.

FAIRR noted significant medical research from the academic community and health bodies such as the World Health Organization that associate meat consumption with increased risks for colorectal cancers, cardiovascular disease, obesity, diabetes, and antibiotic resistance.

Livestock production is increasingly associated with the most challenging environmental problems facing the planet, including global warming, water scarcity, deforestation, and the loss of biodiversity. In particular, the Food and Agriculture Organization of the United Nations recently estimated livestock production is responsible for 14.5 percent of greenhouse gas emissions.

The report points to research by the University of Oxford showing substantial health and environment outcomes through strategies curbing meat production and consumption. A global shift to a plant-based diet in which red meat consumption is cut to 300 grams per week by 2050 would result in a 6 percent cut in global mortality rates, a 29 percent cut in food-related greenhouse gas emissions, and global savings of $735 billion per year.

Sweden, Denmark, and Germany

As nations seek strategies implementing the Paris Climate Agreement and managing complex public health problems, FAIRR said levies on meat are becoming “increasingly probable.” The group noted meat tax proposals are already being discussed in Sweden, Denmark, and Germany.

“If policymakers are to cover the true cost of livestock epidemics like avian flu and human epidemics like obesity, diabetes and cancer, while also tackling the twin challenges of climate change and antibiotic resistance, then a shift from subsidisation to taxation of the meat industry looks inevitable,” Jeremy Coller, chief investment officer at the private equity giant Coller Capital and founder of the FAIRR initiative, said in a statement.

But meat tax skeptics see a long and tenuous connection between the motivations of a few European countries and tax considerations driving state legislatures and units of local government—particularly in a nation that still spends hundreds of millions of dollars annually on subsidies for meat and dairy producers.

U.S. Political Climate

Max Behlke, director of budget and tax for the National Conference of State Legislatures, said he is unaware of any credible campaign to impose an excise tax on meat in any state in the country. While there might be some compelling arguments, Behlke said the political environment doesn’t seem receptive, and dozens of tax administration considerations would have to be managed.

In contrast, while no states have enacted taxes on carbon and sugar-sweetened beverages, several have built political and administrative foundations for such programs. If state lawmakers are anxious to implement new tax regimes in the near future, Behlke said there are other targets ahead of meat.

“I wouldn’t be surprised if a bill to tax meat got introduced, but I would be absolutely shocked if it got anywhere near consideration in any state this year,” he said. “I just don’t see it happening.”

John Cawley, an economics professor at Cornell University and co-director of its Institute on Health Economics, Health Behaviors and Disparities, said any state or local meat tax proposals would face stiff opposition from powerful lobbies, such as the National Cattleman’s Beef Association, the National Pork Producers Council, and the National Chicken Council.

Cawley also predicted advocates would have a tough time making their case before the public because meat is still viewed as a critical component of the food pyramid. Any additional levy on a staple of the American diet would be derided as “regressive.”

“The difference between a soda tax and a meat tax is no one has to consume soda. There are no beneficial aspects to soda pop, where meat has numerous beneficial nutrients,” Cawley said. “So it’s going to be seen as regressive. In general, food taxes fall hardest on the poor because they have to spend a larger percentage of their income on food.”

Sin Taxes “Increasingly Common”

Still, FAIRR’s Coller emphasized any historical examination of sin or behavioral tax regimes suggests policy shifts occur over time and as evidence emerges of social harms.

The white paper report notes policymakers once scoffed at taxes on cigarettes, greenhouse gases, and sweets. Currently, however, 180 countries impose tobacco taxes, 60 jurisdictions tax carbon emissions, and 25 jurisdictions tax sugar-sweetened products.

And meat appears to be on the same trajectory.

“Behavioral taxes are increasingly common. That’s why we’ve seen 16 countries adopt a sugar tax in recent years,” Coller said. “The damage the meat industry causes to our health and environment makes it very exposed to similar levies, and it is increasingly probable we’ll see meat taxes become a reality.”

To contact the reporter on this story: Michael J. Bologna in Chicago at mbologna@bloomberglaw.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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