The Danish government’s proposals to abolish VAT on books and coffee have sparked debate, with concerns raised about the environmental and economic implications. While the initiatives aim to encourage reading and reduce the cost of an everyday commodity, critics argue that they overlook more pressing issues related to sustainability and market failures.

The Minister of Culture initially announced plans to eliminate VAT on books to promote reading among young people. Subsequently, the Moderates, the Minister’s own party, proposed removing the tax on coffee, citing rising prices and its status as a daily necessity.

However, questions have emerged regarding the true necessity of coffee and the environmental consequences of its production. Concerns have been raised about deforestation and the use of chemicals in coffee cultivation, particularly when non-organic and non-fair trade options are chosen.

Furthermore, the effectiveness of removing VAT on books as a means to promote reading has been questioned, considering the availability of free books through Denmark’s extensive library system.

A key argument against these proposals centers on the role of taxes in reflecting the environmental costs of production. The Organic Landsforening advocates for reduced VAT on organic products, aligning with the European Commission’s goal of achieving 25% organic agricultural land in the EU by 2030. They argue that the higher cost of organic products reflects the environmental, climate, and animal welfare costs not accounted for in conventional food prices.

According to the Organic Landsforening, the state generates an additional DKK 700 million annually from VAT on organic products, which contradicts the government’s objectives of expanding the organic sector. Organic farming offers benefits such as protecting drinking water from pesticides, reducing fertilizer use, supporting biodiversity, and improving animal welfare, leading to lower antibiotic consumption.

Critics contend that reducing VAT on organic products would be a more effective approach to addressing market failures and promoting a green transition. This would incentivize consumers to choose sustainable options and acknowledge the true costs associated with conventional food production.

Sybille Kyed, head of agriculture and food policy at the Organic Landsforening, highlights the potential benefits of reduced VAT on organic products, including savings on clean drinking water, aquatic environment restoration, biodiversity preservation, natural pollination enhancement, and reduced reliance on energy-intensive artificial fertilizers. Additionally, it could mitigate the costs associated with antibiotic resistance.

The estimated DKK 300 million cost to the state from lost revenue for each of the proposed VAT reductions on books and coffee has also been raised. Critics suggest that redirecting these funds towards reducing VAT on organic products would be a more strategic investment in long-term sustainability.