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Wednesday, April 29, 2020

Strategic CSR - Meat

The article in the url below raises the possibility of extending the idea of a Pigovian tax (a tax on an activity that causes a negative consequence – i.e., a sin tax) to eating meat. In other words, meat would be taxed as a 'sin' in the same way that cities and states are beginning to tax a range of products, from plastic bags (e.g., Strategic CSR - Kenya) to sugar (e.g., Strategic CSR – CSR Threshold):
 
"Meat could be a target for higher taxes given criticism of the industry's role in climate change, deforestation and animal cruelty. … The idea is still its infancy and faces a lot of opposition from farming groups, but it's emerging as a trend in Western Europe. … If taxes gain traction, it could encourage more people to switch to poultry or plant-based protein and help drive the popularity of meat substitutes."
 
Such a tax has been advanced as a way to address animal welfare, as well as reduce meat consumption:
 
"In Germany, some politicians have proposed raising the sales tax on meat products to fund better livestock living conditions. A poll … showed a majority of Germans, or 56.4%, backed the measure, with more than a third calling it 'very positive' and some 82% of voters for the environmentalist Greens in favor."
 
This article coincides with another report from the IPCC recently on climate change and the land (https://www.ipcc.ch/report/srccl/), documenting the waste and damage associated with our current farming/land-use methods:
 
"The loudest argument against meat at the moment is not based on health but climate change. In a report this month, the United Nations said agriculture, forestry and other land use contributes about a quarter of greenhouse emissions."
 
In the face of the scale of the problem, a tax on red meat seems as though it will not get us all the way to there from here. The principle is important, however. If you believe that the market is the most effective means of allocating scarce and valuable resources (which I do), then sin taxes are the way to account for negative externalities in the pricing of products. Get the pricing right, and demand/supply will balance at the 'appropriate' level. In my opinion, this lifecycle pricing (together with technological innovation) is the only way we will combat climate change and have some hope of preserving a planet on which we can live.
 
Take care
David
 
David Chandler
© Sage Publications, 2020
 
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Red Meat Could Be the Next Sin Tax After Sugar, Fitch Says
By Olivia Konotey-Ahulu
August 13, 2019
Bloomberg Businessweek