by Anna Leibinger

July 12, 2024

In a country where consuming animal-based food products is deeply ingrained in the culinary culture, a progressive proposal has been making waves over the last four years: taxing animal-based food products. This idea, aimed at addressing animal welfare, environmental, and health issues, lead to a debate among politicians, industry stakeholders, civil societies, and the public.

Over the past few years, Germany has seen a series of milestones that have shaped the conversation around this controversial proposal. Here is a closer look at the developments leading up to this point and the arguments shaping the debate.

Troublesome animal welfare conditions

Industrial farming practices often involve conditions that many consider inhumane, including overcrowding and the inability of animals to engage in natural behaviors.¹ As awareness of these conditions grows, so does the call for more ethical farming practices.² However, market mechanisms have failed to lead to better animal welfare, as animal welfare can be seen as a public good. ^3-5

Detrimental environmental impact

The environmental consequences of livestock farming are profound. Globally, the sector is a significant source of greenhouse gas emissions, deforestation, and water pollution.^6-8 Livestock farming is responsible for about 15 percent of all anthropogenic greenhouse gas emissions, while meat production alone accounts for nearly half of all food-related emissions.⁹ The vast land requirements for animal husbandry and feed production—occupying around 80 percent of the world’s agricultural land—make it a major driver of biodiversity loss.¹⁰

Unhealthy dietary trends

Excessive consumption of red and processed meats is contributing to an array of illnesses. Heart disease, diabetes, and certain cancers have all been linked to diets heavy in these foods.^11-13 Despite national dietary guidelines advising moderation, many Germans consume far more meat than recommended.¹⁴

A pivotal report

In February 2020, a government-appointed expert commission (the Competence Network Livestock Farming, or Kompetenznetzwerk Nutztierhaltung) released a comprehensive report recommending a series of reforms to improve animal welfare and sustainability in livestock farming in Germany. Central to their recommendations was the financing of these reforms. They proposed three different kinds of tax design, but preferred an excise tax on animal-based products. The rationale was straightforward: While the levy would generate revenue to help farmers transition to more sustainable and humane practices, higher prices would reduce consumption, thus mitigating environmental damage and health risks.¹⁵

An overview of the different kinds of taxes that were proposed

	Increase of Value-Added-Tax (VAT or Mehrwertsteuer)	Excise Tax on animal-based foods (Tierwohlabgabe)	Special levy for animal welfare (Sonderabgabe Tierwohl)
How?	Price-based	Volume- or weight-based	Volume- or weight-based
Where?	Anywhere where the VAT is already paid at the moment on all animal-based food products	At the point of sale to consumers (retail, gastronomy, cafeterias, etc.) on all animal-based food products	Anywere in the supply chain or at point of sale to consumers on all animal-based food products
How much?	At the moment, meat and dairy is taxed at a reduced rate of 7%. The proposal suggests to increase this to the normal rate of 19%. Based on average consumption patterns, this would amount to an additional burden on consumers of 1.78 to 2.33 Euros per person per week.	40 cents/kg meat and processed meat, 2 cents/kg for dairy and eggs, 15 cents/kg for cheese and butter. Based on average consumption patterns, this would amount to an additional burden on consumers of 2.40 to 3.50 Euros per person per month.	Not specified
What are the advantages?	Ease of implementation and low levels of bureaucracy, as the system is already in place.	Revenues can be used in full by federal government.	Revenues can be used in full by government
What are the disadvantages?	Revenues are divided between the states and the federal government. Price discrepancy between cheap and expensive products increases, so this may make animal welfare products relatively more expensive.	High levels of bureaucracy, a new system would have to be established. Calculation of tax may be complicated for processed foods and composite dishes.	Questionable, if legally possible according to feasibility study.

A timeline of events

Find out more about the milestone events regarding a tax on animal-based food products in Germany in this interactive timeline:

Notes: SPD stands for the Social Democratic Party of Germany, FDP stands for Free Democratic Party, CDU stands for Christian Democratic Union, and CSU for Christian Social Union.

Public and political reaction

The proposal of the Competence Network Livestock Farming quickly sparked a lively public debate. Proponents argue that the tax is a necessary step to address the externalities of animal-based food consumption—costs currently borne by society in terms of ethical concerns, environmental degradation, and health care expenses. They believe that by internalizing at least some of these costs, consumers would be incentivized to make healthier and more sustainable food choices, and that the tax would generate enough revenue to fund the necessary investments in animal welfare. Opponents, however, contend that the tax would disproportionately impact lower-income households, for whom meat and dairy are affordable sources of nutrition. They doubt the tax’ effectiveness and suspect that the tax revenue will not be used for animal welfare but will be lost in the system or used for other things. They believe that there are other policy instruments that are better suited to reach the stated goals. They also argue that such a tax could harm the agricultural sector in Germany, leading to job losses and a decreased number of farms.³¹

Our research

As part of a research project, we analyzed 381 German newspaper articles from general and trade press, and searched for narrative frames within these articles. Additionally, we marked any policy actor who employed these frames. In the end, we identified 93 different narrative frames, of which six referred to the problem definition, 54 were frames used as arguments against the tax, 16 as arguments for the tax, and 17 were for the tax but only if certain design aspects were to be considered. Some of these frames were only used once, others we found more than 100 times in the 381 articles. In total, we found 1002 text segments that contained negative frames, 678 that contained positive frames, 513 about specific design features and conditions, and 432 about the problem definition. In order to make this work publicly available, and let the data speak for itself, we curated these data and brought them in a form that allows everyone to explore them in an interactive way, providing researchers, policymakers, and the public with an overview and insights into the debate.

Explore the data

As mentioned above, we found six prominent frames that define problems, and are given as reasons for why a tax on animal-based food products is debated in the first place.

Hover over any bar in one of the charts to see more information. Click on any bar or category text to filter the whole dashboard. Click again on the same bar or category text to remove the filter again.

The larger part of our analysis, however, entailed finding narrative frames that are used as positive or negative arguments for or against the tax, and frames that are in favor of specific design aspects or conditions. Again, you can hover and click to interact with the data. When you hover over the bars of the narrative frames, you will also see an explanation of the frame and an exemplary text segment.

Some responses to common arguments

Various narratives surfaced repeatedly in the media debate, yet certain key arguments often remain underexplored and insufficiently contextualized. In an effort to shed light on some key points, we have gathered and synthesized information from existing reports and studies. Our goal is to provide a resource that can help inform future discussions on taxing animal-based food products in Germany.

1. The tax as amplifying inequalities

This narrative frame reflects the view that taxation policies contribute to widening socioeconomic disparities by disproportionately disadvantaging low socio-economic households. They suggest that increased taxes on animal-based food products may exacerbate existing inequalities in economic inclusion and opportunity as a tax would not change dietary patterns of the rich, but exclude individuals living in low socio-economic households from making their own free choices about their diet.

What does the Competence Network Livestock Farming say about this?

The network recommends to complement any increase in tax (VAT or excise tax) with social measures. They mention three possible policies that can be implemented to alleviate the tax burden for individuals living in low socio-economic households:

• Increase welfare payments for people without other income (e.g. the long-term unemployed: Hartz IV or Bürgergeld).
• Reduction in income tax rates for low-income groups.
• Direct transfers to low-income households.

What does the feasibility study say about this?

• About welfare payments: An increase of these rates will happen automatically within the already existing legal framework. However, this may happen with some delay.
• About reducing income tax rates for low-income groups: This mechanism is already embedded in the current income tax system (EStG) and does not require additional specific measures, although there may be some delays here as well; However, legislators have the option to offset a new excise tax or higher VAT with further income tax reductions beyond what is already happening automatically by law, similar to how the CO₂ pricing was compensated by increasing the commuter allowance. However, it must be kept in mind not to undermine the intended environmental steering effect.
• About direct transfers: This is legally possible; However, it would require a substantial bureaucratic effort. Because of this, it may be advantageous to ensure social equity of the tax through already existing frameworks in social and tax law.

2. Tax as not improving animal welfare, Tax revenue as likely to get lost, Earmarking as not possible or against EU law

We found four different narrative frames that are centered around the same concern, namely that the tax will not actually lead to better animal welfare (“Not improving animal welfare”, “Tax revenue lost, “Earmarking as not possible”, “Earmarking as against EU law”). Taken together, these frames are by far the most prominent anti-tax argument. These arguments reflect the perception that taxes aimed at improving animal welfare do not directly lead to tangible improvements in animal conditions. Despite the implementation of taxes or levies intended to enable investments in animal welfare, there might be obstacles that prevent an improvement of animal welfare. More specifically, some point out that earmarking of taxes is not legally possible—either according to German or EU law. Additionally, some raise the concern that the revenues generated from taxes cannot be effectively allocated towards their intended purposes. Instead, the funds may be lost or mismanaged within bureaucratic systems, leading to inefficiencies and diversion away from the original goals.

What does the Competence Network Livestock Farming say about this?

The network states in their recommendations that earmarking would be possible with an excise tax and not a VAT increase (which has been rebutted by the feasibility study, see below). This is why they initially preferred an excise tax over a VAT increase in their recommendations in 2020. In 2022 they stated that they still see both options as viable; However, an increase in VAT would be preferable in order to implement a tax quickly, at low costs, and in an unbureaucratic fashion.

What does the feasibility study say about this?

Earmarking can be seen as potentially unconstitutional in Germany, if it excessively restricts the budgetary freedom of the legislature. However, this is considered unlikely in the case of an excise tax on animal products due to the relatively small proportion of earmarked funds compared to the overall federal budget​. Hence, it would be legal to earmark the revenues of both an excise tax and an increase in VAT. However, the VAT is divided between the states (Bundesländer) and the federal budget, and federal laws can only earmark the federal share.

The problem lies in the EU law. Specifically, it could be seen as a discriminatory measure if the tax applies to both domestic and imported animal products, but only benefits domestic producers, which would violate EU law.

If foreign products are to be taxed as well, it would be necessary to decouple the tax revenues from the animal welfare premiums paid to farmers. This would mean that the subsidies’ justification and amount could not be tied to the levy’s revenue. Key considerations include how much the subsidy relies on the levy, if the levy’s revenue is exclusively used for the subsidy, and if this connection is mandated by regulations. To avoid a direct link, it would be essential to avoid legally binding earmarking, ensuring its revenue goes into the general budget. Additionally, broadening the purpose of the law that regulates animal welfare premiums paid to farmers may be beneficial. For instance, this law could reach beyond just the livestock sector transformation strategy, and be potentially incorporated into a wider nutritional policy context.

3. Regulations and control of agricultural sector needed (Agri regulation)

This narrative frame focuses on the necessity of regulating and monitoring agricultural practices. This is often seen as more effective than taxes and subsidies. This includes everything within the agricultural and meat processing industry, e.g., regulations on animal welfare or regulations on workers‘ rights.

What does the Competence Network Livestock Farming say about this?

The network does not see these regulations and taxes as mutually exclusive but rather as complements. The network recommends to establish a long-term transformation strategy for the livestock sector. Within this strategy, they propose advancing regulatory laws with specific timelines, and establishing legal minimum standards for areas not currently covered. The network recommends transitioning all German livestock farming to Level 2 as a long-term goal. Additionally, achieving a significant market share in Level 3 is advised to promote technical and organizational innovations and address issues with small quantities in the value chain. Level 1 (Stall Plus) involves more space and enrichment materials. Level 2 (Verbesserte Ställe) includes additional space, structured environments, and ideally access to outdoor climates. Level 3 (Premium) offers even more space than Levels 1 and 2, with outdoor access or pasture for livestock like cattle and poultry, aligned closely with organic farming standards. In order to achieve this transformation and to maintain the competitiveness of the industry, the network states that premiums have to be paid to farmers to fund this transformation. They mention different options to fund this premium, but in the end recommend a tax on animal-based food products.

4. Tax as hurting domestic production

This narrative frame claims that a tax that may only be applied to domestic products would thus disadvantage them and lead to more consumption of cheaper foreign products which in turn would make it harder for domestic producers to survive. These arguments sometimes mention or imply these assumptions:

• Foreign meat is suggested to be worse for the climate, as it has to be transported for longer distances.
• Foreign livestock farming is portrayed as being worse for animal welfare than in Germany (at least after a tax and regulations implemented in Germany according to the recommendations of the Competence Network).

What does the Policy Impact Assessment on the Recommendations of the Competence Network Livestock Farming say about this?

The livestock sector is economically crucial for German agriculture, generating over 60% of its sales revenue. For over 20 years, the livestock sector has faced critical debates on animal welfare and environmental issues, which were mostly tolerated by the industry and politicians as long as economic expansion continued and mainstream agriculture appeared successful despite media criticism. This economic expansion continued largely unchallenged until recently, when growing societal criticism, particularly among younger and educated demographics, began to influence market trends and policies. This has led to significant uncertainty among livestock farmers, with increasing pressure from stricter retail standards, legal regulations, and local opposition to farm expansions. While a comprehensive livestock strategy as proposed by the Competence Network Livestock Farming supported by the majority could provide clarity and financial stability for farmers, it must contend with ongoing structural changes in the industry and varying effects on different types of livestock operations. Additionally, consumer behavior could shift towards higher-priced animal welfare products, and removing VAT reductions on animal products might further reduce consumption. Overall, the sector’s future will be shaped by these multifaceted and sometimes conflicting influences, and the strategy’s impact on domestic production will depend on how it balances these pressures, potentially mitigating the projected decline in net exports or even reversing it. Hence, it is unclear how exactly the domestic production will be affected, as it is dependent on many factors that may change over the next few years, such as dietary trends.

5. Subsidy reform as superior

This narrative frame usually refers to the fact that most agrarian subsidies come from the EU at the moment (through the CAP: Common Agricultural Policy) and are distributed to farmers based on hectare size of the farms. This is often criticized and it is suggested that other factors, such as sustainability or animal welfare should also be considered.

What does the Competence Network Livestock Farming say about this?

The network believes that these funds would hardly be sufficient when considering other funding needs in the agricultural environmental sector (biodiversity, climate protection, etc.).

What does the feasibility study say about this?

The proposed Eco-Schemes under the common agricultural policy (CAP) reform could theoretically cover animal welfare premiums if focused entirely on animal welfare measures and all direct payment funds were allocated accordingly. However, due to competing demands for CAP funds, they would likely be insufficient to meet the financial needs for animal welfare, environmental, and climate protection goals. Additionally, and due to their annual nature, they would not be suitable for the initial investment subsidies.

6. Labels as superior

This narrative frame discusses the effectiveness and advantages of labeling compared to taxation in influencing consumer behavior.

What does the Competence Network Livestock Farming say about this?

The network does not view labels and taxes as mutually exclusive but rather as complements. They recommend implementing labeling measures that enhance transparency on animal welfare standards, aiming to educate consumers and encourage greater willingness to pay for higher animal welfare standards. In 2022 they add: Since February 2020, the private sector landscape for labeling has changed. As of April 1, 2019, there has been a classification system in place by retailers ranging from Level 1 (legal standard) to Level 4 (premium) for all major animal species, which has become widely adopted and recognized by consumers. These levels are structured according to recommendations from the Competence Network. The network strongly advises that any governmental labeling should preserve existing progress accomplished by the private sector.

What does the feasibility study say about this?

Introducing only labels would assume that consumers are willing to pay a premium for products with higher welfare standards, which in turn would mean that producers could sell these products at higher prices and hence compensate for higher production costs. This may be feasible for fresh meat, eggs and dairy; However, it is likely to be much more complicated for processed goods and composite dishes and will lead to so-called market separation costs, as producers could only use ingredients from the same animal welfare standard in one good. But especially for these processed foods it can prove difficult to realize higher willingness to pay for premium products. Without a sizable market, however, producers will not invest in this market separation. Hence, the feasibility study concludes, the producers need incentives to invest in market separation and in higher animal welfare standards, which can happen through animal welfare premiums paid to producers, but these have to be funded, e.g. through a tax.

What do studies say about this?

Taillie et al. conducted a randomized controlled trial in 2023 in a naturalistic online grocery store setting, with four study groups: control, health and environmental warning labels, tax, combined warning labels and tax. The study found that taxes have a slightly greater impact than warning labels. The combination of both methods yields the most significant reduction in red meat purchases, demonstrating the effectiveness of a multifaceted approach.³⁴ However, this was done with warning labels about health and environmental impact, and not animal welfare labels.

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