Title

Taxing sweets: sweetener input tax or final consumption tax?

Campus Units

Economics, Center for Agricultural and Rural Development

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

7-2012

Journal or Book Title

Contemporary Economic Policy

Volume

30

Issue

3

First Page or Article ID Number

344

Last Page

361

DOI

10.1111/j.1465-7287.2011.00278.x

Abstract

Policymakers are considering various policies to reduce obesity and its associated costs, including consumption taxes on high-calorie foods and specifically sweetened foods. We investigate two tax policies to reduce added sweetener consumption: a consumption tax on sweetened goods and a sweetener input tax. Both tax instruments can reach the same policy target of reducing added sweetener consumption and are found to be regressive. The tax on sweetener inputs targets sweeteners directly and leads to a loss in consumer surplus that is only one-fifth of that caused by the final consumption tax. Previous analyses have overlooked this important point.

JEL Classification

I18, Q18

Comments

This is a working paper of an article from Contemporary Economic Policy 30 (2012): 344, doi: 10.1111/j.1465-7287.2011.00278.x.