Finance Minister Vincent Van Peteghem (CD&V) recently launched the idea of reducing VAT on fruit and vegetables from six to zero percent. An idea that was approved by coalition partner Groen. “Vegetables and fruits are too expensive for many people to include in their daily diet. By abolishing VAT on fruit and vegetables, we are making a varied diet much more accessible to everyone,” said Groen MP Barbara Creemers.
It is true that healthy food is a serious expense for many. We see signs of this in every crisis: when inflation rises and purchasing power falls – as it is now – many people almost immediately choose cheaper but also unhealthy diets. Take the example of Beyond Meat, which markets plant-based burgers. Since the turn of the year, that company has fallen in value by half. The reason, according to CEO Ethan Brown: disappointing sales due to “inflationary pressures” that mean consumers are choosing cheaper forms of protein, such as red meat, that are scientifically proven to be unhealthier than the plant-based variety. Fruit and vegetables, on the other hand, became six to even thirty percent more expensive last year. The effect can also be guessed here: Fewer salads, more frozen pizzas, fewer healthy nutrients, more unhealthy sugars.
Due to inflationary pressures and the resulting choice for cheaper and unhealthier food options, new social costs will naturally arise in the long term, particularly through disease (and the associated loss of productivity) and premature death. It is the forgotten billion-dollar cost of every economic crisis, of every rise in inflation. A cost that is not immediately felt, but continues to work for years. And where the costs of the corona crisis pale!
Already 55 percent of the Belgian adult population is overweight and 21 percent obese, with all the associated health risks: cardiovascular disease, cancer, diabetes, et cetera. Research shows that people in a socio-economically vulnerable situation are much more likely to become obese.
In that respect, the democratization of healthy food is not really just a culpable omission. Access to healthy food should be a basic human right.
Need for a system of real behavior change
The question is, however, whether a VAT reduction on fruit and vegetables to zero percent will have sufficient effect? For example, how can it be avoided that the producers of the food do not take advantage of raising prices, so that it becomes a zero-sum operation? Should we get there with a VAT reduction only on fruit and vegetables if you know that the VAT on crisps is the same as on fish? Is a jar of pasta sauce with its sugars and oil a vegetable? Is fruit juice fruit? And how do you ensure that we all start eating healthier if the consumer is bombarded with advertising campaigns for unhealthy, cheap food? Does anyone really believe that everyone will leave the chips in droves and buy fruit and veg instead if VAT drops to 6%? A bunch of bananas now costs around 1.5 euros. With a VAT reduction to zero percent, it becomes 1.4 euros. Ten cents profit. It won’t change your behavior. VAT is a consumption tax, not a behavioral tax. In any case, behavior change is one of the most difficult things out there. Just ask anyone who wants to quit smoking.
A much broader approach is needed. An approach that promotes real behavior change that teaches people to eat healthy from an early age because nutritional poverty among our children and youth is very high. In Belgium, one in four children grows up in food poverty! After all, unhealthy food is not only often cheaper, it is also usually quicker and easier to prepare.
Young people are all too aware that they eat unhealthy food and would change their behavior if healthy food became cheaper, a survey of a thousand 18 to 25-year-olds showed a few years ago. The same study showed that the majority of young people surveyed were open to receiving part of their salary in the form of ‘healthy meal vouchers’. Why doesn’t the government do it? Replace the current meal vouchers with a closed system that only allows the purchase of healthy products – such as fruit and vegetables. It will have a greater effect than a limited VAT reduction and will, above all, lead to a sustainable behavioral change. Furthermore, with such a closed system, you can also achieve other effects, such as stimulating the local economy, by making ‘healthy meal vouchers’ only exchangeable there.
Combine this idea with stricter regulation of unhealthy food advertising, for example requiring manufacturers to warn their ads, and we’ll get the overweight and obesity concerns down. In the long term, it will give more than this VAT measure.
Erik Sælens is the CEO of Unbox.