Environmental food taxes and inequalities: Simulation of a meat tax in Sweden

This paper investigates the distributional effect of an environmental tax on meat in Sweden, if such a tax was to be introduced. Welfare effects are measured as Compensation Variation (CV) for multiple price changes where Hicksian cross price elasticities, household expenditures and price changes are included in the calculations. Results show that taxes on meat are almost neutral over households when expenditures on meat are used as welfare indicators, and regressive if income is used. This can be explained by the households' similar shares of total expenditures on meat. The households with the smallest income levels need to be compensated with 904 SEK per person and year (equivalent to Euro 86.6 per year in the year 2009 exchange rate) to feel that utility is not lowered if taxes on meat are introduced, and the households with the highest income levels need to be compensated with 1141 SEK (Euro 109.3) per person and year. For the year 2009 these compensations correspond to 0.74% and 0.78% of total expenditures for the low and high income group, respectively. When instead comparing the compensation with income levels, the effects correspond to 0.99% for the households with the smallest income levels and to 0.51% for the households with the largest income.