Tax Law and Policy as Tool in Fight Against Food Waste, Climate Change, and Hunger

The Harvard Law School Food Law and Policy Clinic developed nine actionable recommendations to utilize tax policy to facilitate the redistribution of safe, surplus food to people struggling with hunger.

One-third of food produced across the globe is lost or wasted. Most of this lost or wasted food ends up in landfills, where it rots and produces greenhouse gases that are damaging to the climate. At the same time, global hunger persists at crisis levels, exacerbated by the COVID-19 pandemic. To mitigate the devastating effects of food loss and waste, the Harvard Law School Food Law and Policy Clinic (FLPC) and The Global FoodBanking Network (GFN) released recommendations for global leaders to leverage tax law and policy as a tool for promoting food donation.

FLPC and GFN’s new issue brief, Promoting Food Donation: Tax Law and Policy, was released through The Global Food Donation Policy Atlas, which examines food donation laws and policies in countries around the world. In every country researched thus far, tax policy has been raised as a key and vital opportunity to unlock increased donation, or in some cases, as a barrier to the donation of safe, surplus food. In this issue brief, the authors highlight tax policy as a powerful tool that governments can leverage to decrease food waste, slow climate change, and encourage food donation. However, tax policies frequently fail to meaningfully incentivize food donation, or may even inhibit donor ability to recoup costs associated with food donation. Dumping safe, surplus food in a landfill is often the most affordable option, despite its high social and ecological costs.

The issue brief outlines nine actionable, real-world ways governments can use tax policy to encourage the rescue of safe, surplus food and support food donation. With each recommendation, authors highlight best practices from countries around the world, as identified in the Atlas project. Among the nine recommendations are:

• Include a charitable tax credit or deduction for in-kind food donation in national tax laws and policies.
• Ensure that the deductions or credits offered are not limited by low deduction caps or other limitations that can severely reduce the significance of the tax incentives for donors.
• Consider the additional costs associated with food donation—such as transportation—when designing tax incentives, and include benefits that help offset these costs.
• Exempt food donations from the list of transactions that are VAT-taxable and ensure food donors are allowed to reclaim VAT credits attached to food that is donated.
• Restrict opportunities to deduct discarded food as a “business loss,” instead requiring them to first make efforts to donate such food when possible.

“Countries around the world have implemented a number of these solutions already and demonstrated how tax laws and policies can positively impact people and the planet by strategically incentivizing and removing barriers for food donation,” said Emily Broad Leib, clinical professor of law and faculty director of the Harvard Law School Food Law and Policy Clinic. “Not only can these policies help curb food waste, but they can improve nutrition access and bolster financial security for small farmers and agribusiness. We encourage government leaders to leverage their tax laws in support of greater food donation.” 

“Rising food insecurity and preventable food loss and waste are serious problems that require effective policy tools. Incentivizing food donation through the tax code, as outlined in this brief, is one way to help address these challenges and support innovative food recovery models,” said Doug O’Brien, vice president of programs, of The Global FoodBanking Network. “Too often safe, wholesome food is lost or wasted, squandering resources at high cost to the environment and society. Smart tax policies including tax deductions, credits, and other incentives for food donation are practical, cost-effective means for governments to prevent good food from going to waste, increasing food access, and improving food security.”  

The Global Food Donation Policy Atlas includes a library of Legal Guides and Policy Recommendations that highlight opportunities to improve food donation in countries around the world, an interactive map to compare countries’ current food donation laws and policies, and issue briefs on strengthening food donation amid COVID-19. For more information, visit: atlas.foodbanking.org.