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Germany's federal environmental agency, Umweltbundesamt (UBA), has called for meat and dairy products to be subject to a higher rate of value-added tax.
Supplies of food in Germany are generally subject to the lower seven percent rate of VAT. However, the UBA recommended in a report published on January 5 that supplies of meat and milk be taxed at the standard rate of 19 percent because of the high levels greenhouse gas (GHG) emissions associated with these industries.
According to the agency, the production of one kilo of beef results in GHG emissions of between seven and 28 kilos. By contrast, the production of one kilo of arable crops, such as fruits or vegetables, produces less than one kilo of GHGs.
By taxing these activities at a lower rate, the state was effectively subsidizing the livestock and food processing industry to the tune of EUR5.2bn (USD5.5bn) annually, the report said.
The UBA suggested that the Government could use the additional revenue from taxing meat and dairy products at the standard rate to reduce VAT for activities that have a less harmful impact on the environment and the climate, such as public transport.
The report concluded that EUR57bn in public money was spent on subsidizing environmentally harmful industries in 2012, mainly in the transport and energy sectors.
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