10 actors join forces on a VAT proposal that few politicians talk about: Remove VAT on organic products

Økologisk Nu
10 actors join forces on a VAT proposal that few politicians talk about: Remove VAT on organic products

These actors are now launching a nationwide campaign for a solution to the political dispute over lower food VAT: the VAT on all organic products should be removed. The Organic Association has made an estimate showing that solely due to the higher price of organic products, organic consumers pay about 700 million DKK more annually in VAT than if they bought comparable conventional products. "Lower VAT on organic products should be used as a tool to promote public health and support more responsible and sustainable food production," writes the Organic Association, continuing: "Therefore, we say: Let the market drive the green transition and equalize the price difference between organic and conventional products, so that the state at least receives the same VAT revenue from the sale of an organic food as from a non-organic food." Political disagreement Before the election, a majority in the Danish Parliament agreed on a deal to reduce VAT on food. But they do not agree on the specifics of how it should be implemented. The debate revolves around whether VAT should be reduced generally for all foods, whether it should be removed on fruits and vegetables, or whether a combination of both solutions should be adopted. At the same time, critics point out that managing different VAT rates and defining when a product qualifies will be difficult and costly. For example, if VAT is removed on fruits and vegetables, questions arise, such as whether sun-dried tomatoes in a jar or a smoothie with added sugar are considered fruits and vegetables. By stating that a lower VAT rate should only apply to organically certified products, this problem is solved, argues the Organic Association and other actors, who also estimate that the cost would be about 10 billion DKK lower than if VAT were reduced on all foods. "This will also ensure fewer pesticide residues in our food and drinking water, significantly better animal welfare, reduced antibiotic use, higher biodiversity, and less nitrogen runoff into our marine environment. Organic farming offers many good solutions for a farm that provides us with a healthy planet, healthy people, and healthy, robust animals," writes the Organic Association. The campaign is supported by – in addition to the Organic Association – egg and vegetable producer Månsson, dairy companies Thise, Naturmælk, and Øllingegaard Dairy, Merkur Cooperative Bank, the Animal Protection Society, ice cream maker Hansens, health food producer Natur Drogeriet, and the distributor of organic spirits, Local Spirits. The proposal aligns with a recommendation from the Green Growth Forum, which consists of 12 green organizations and companies. In August, they presented their recommendations for a greener food policy, one of which was to remove VAT on organic products.

These actors are now going on the offensive with nationwide advertisements about a solution to the political fight over lower food VAT: the VAT on all organic products should be removed.

The Organic Association has made an estimate showing that solely due to the higher price of organic goods, organic consumers pay approximately 700 million DKK more per year in VAT than if they bought equivalent conventional products.

"Lower VAT on organic products should be used as a tool to promote public health and support a more responsible and sustainable food production," writes the Organic Association and continues:

"Therefore, we say: Let the market drive the green transition and equalize the price difference between organic and conventional products, so that the state at minimum has the same VAT revenue from the sale of an organic food as from a non-organic food."

Political disagreement

Before the election, a majority in the Parliament agreed on a deal to lower VAT on food. But they do not agree on exactly how it should look. The debate revolves around whether VAT should be reduced generally for all foods, whether it should be removed on fruits and vegetables, or whether a combination of both solutions should be implemented.

At the same time, critics point out that it will be difficult and costly to administer different VAT rates and to delineate when a product should be covered. If VAT is to be removed on fruits and vegetables, for example, the question arises whether sun-dried tomatoes in a jar or a smoothie with added sugar are considered fruits and vegetables.

By stating that a lower VAT rate should only apply to organically certified products, the problem is solved in one stroke, argues the Organic Association and other actors, who also estimate that the bill will be about 10 billion DKK lower than if VAT is reduced on all foods.

"It will also ensure that there are fewer pesticide residues in our food and drinking water, significantly better animal welfare, less antibiotic use, higher biodiversity, and less nitrogen runoff into our marine environment. Organic farming offers so many good answers for a farming system that gives us a healthy planet, healthy people, and healthy, robust animals," writes the Organic Association.

Behind the campaign are - besides the Organic Association - egg and vegetable producer Månsson, the dairies Thise, Naturmælk, and Øllingegaard Dairy, Merkur Cooperative Bank, Animals' Protection, ice cream maker Hansens, health food producer Natur Drogeriet, and the distributor of organic spirits Local Spirits.

The proposal aligns with a recommendation from the Green Growth Forum, which consists of 12 green organizations and companies. In August, they presented their recommendations for a greener food policy, one of which was to remove VAT on organic products.