Designing fiscal policies for health and climate: Trade-offs, co-benefits and distributional effects in Great Britain

Current food systems contribute to poor diets, that are the leading global risk factor for ill health and premature mortality, while also accelerating climate change. We simulated demand responses to food taxes and subsidies in Great Britain assessing co-benefits and trade-offs across nutrition and environmental outcomes. Six co-created policy scenarios included taxes on less-healthy and higher-carbon foods, and subsidies for healthier, lower-carbon foods. Taxes increased prices on average by 20%. A tax on high-fat, sugar and salt foods produced the greatest reduction in sugar (-6.4% day/person), declines in saturated fat (-5.8%) and sodium (-3.6%) purchases, with modest environmental co-benefit (<4% reduction across environmental outcomes, including GHG emissions, land use, eutrophication, water use/scarcity) and higher welfare losses for households in more deprived areas. Higher-carbon food tax was most effective environmentally (-8.4 to -14.6% reduction in environmental outcomes) while also reducing sugar (-5.8%), sodium (-5.4%) and saturated fat (-10.4%) purchases. It led to largest welfare losses, albeit affecting households in less deprived areas relatively more. As a trade-off, tax-only scenarios reduced fibre (3-4%) purchases. Subsidy-only policies increased purchases, including fibre and fruit and vegetables, but had worse environmental outcomes than at baseline. Combined tax-and-subsidy approaches achieved moderate improvements in nutrition and environmental outcomes with minor welfare effects. Overall, health- and environment-focused food taxes can offer significant co-benefits in Great Britain, but trade-offs must be addressed in real policy contexts. Combining taxes with price decreasing measures is likely necessary for equitable, non-regressive systems that optimise outcomes for both health and the environment.