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Taxing Sweets: Sweetener Input Tax or Final Consumption Tax?

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  • Miao, Zhen
  • Beghin, John C.
  • Jensen, Helen H.

Abstract

In order to reduce obesity and associated costs, policymakers are considering various policies, including taxes, to change consumers’ high-calorie consumption habits. We investigate two tax policies aimed at reducing added sweetener consumption. Both a consumption tax on sweet goods and a sweetener input tax can reach the same policy target of reducing added sweetener consumption. Both tax instruments are regressive, but the associated surplus losses are limited. The tax on sweetener inputs targets sweeteners directly and causes about five times less surplus loss than the final consumption tax. Previous analyses have overlooked this important point.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 31969.

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Date of creation: 03 Sep 2010
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Handle: RePEc:isu:genres:31969

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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  1. John C. Beghin & Jean-Christophe Bureau & Sophie Drogué, 2003. "Calibration of Incomplete Demand Systems in Quantitative Analysis, The," Center for Agricultural and Rural Development (CARD) Publications 03-wp324, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Farah, Hodan A. & Buzby, Jean C., 2005. "U.S. Food Consumption Up 16 Percent Since 1970," Amber Waves, United States Department of Agriculture, Economic Research Service, November.
  3. Chouinard, Hayley H. & Davis, David E. & LaFrance, Jeffrey T. & Perloff, Jeffrey M., 2006. "Milk Marketing Order Winners and Losers," 2006 Annual meeting, July 23-26, Long Beach, CA 21238, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Boizot-Szantai, Christine & Etile, Fabrice, 2005. "The Food Prices / Body Mass Index Relationship: Theory and Evidence from a Sample of French Adults," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24734, European Association of Agricultural Economists.
  5. O'Donoghue, Ted & Rabin, Matthew, 1997. "Doing It Now or Later," Department of Economics, Working Paper Series qt7t44m5b0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  6. John C. Beghin & Helen H. Jensen, 2008. "Farm Policies and Added Sugars in US Diets," Center for Agricultural and Rural Development (CARD) Publications 08-wp462, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  7. Kuchler, Fred & Tegene, Abebayehu & Harris, James Michael, 2004. "Taxing Snack Foods: What to Expect for Diet and Tax Revenues," Agricultural Information Bulletins 33607, United States Department of Agriculture, Economic Research Service.
  8. Leicester, A. & Windmeijer, F., 2004. "The 'fat tax': economic incentives to reduce obesity," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
  9. Timothy J. Richards & Paul M. Patterson & Abebayehu Tegene, 2007. "Obesity And Nutrient Consumption: A Rational Addiction?," Contemporary Economic Policy, Western Economic Association International, vol. 25(3), pages 309-324, 07.
  10. Emi Nakamura, 2008. "Pass-Through in Retail and Wholesale," NBER Working Papers 13965, National Bureau of Economic Research, Inc.
  11. Schroeter, Christiane & Lusk, Jayson L., 2007. "The Impact Of Economic Factors On Consumer Health," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 7364, Western Agricultural Economics Association.
  12. Schroeter, Christiane & Lusk, Jayson & Tyner, Wallace, 2008. "Determining the impact of food price and income changes on body weight," Journal of Health Economics, Elsevier, vol. 27(1), pages 45-68, January.
  13. Joseph A. Atwood & Glenn A. Helmers, 1998. "Examining Quantity and Quality Effects of Restricting Nitrogen Applications to Feedgrains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(2), pages 369-381.
  14. John Beghin & Jean-Christophe Bureau & Sophie Drogue, 2004. "Calibration of incomplete demand systems in quantitative analysis," Applied Economics, Taylor and Francis Journals, vol. 36(8), pages 839-847.
  15. Smed, Sinne & Jensen, Jorgen D. & Denver, Sigrid, 2007. "Socio-economic characteristics and the effect of taxation as a health policy instrument," Food Policy, Elsevier, vol. 32(5-6), pages 624-639.
  16. Cash, Sean B. & Sunding, David L. & Zilberman, David, 2004. "Fat Taxes And Thin Subsidies: Prices, Diet, And Health Outcomes," 2004 Annual meeting, August 1-4, Denver, CO 19961, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  17. Schmidhuber, Josef, 2004. "The Growing Global Obesity Problem: Some Policy Options to Address It," eJADE: electronic Journal of Agricultural and Development Economics, Food and Agriculture Organization, Agricultural and Development Economics Division, vol. 1(2).
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Cited by:
  1. John C. Beghin & Amani Elobeid, 2013. "The Impact of the U.S. Sugar Program Redux," Food and Agricultural Policy Research Institute (FAPRI) Publications 13-wp538, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  2. Miao, Zhen & Beghin, John C. & Jensen, Helen H., 2012. "Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity," Staff General Research Papers 32211, Iowa State University, Department of Economics.
  3. Bonnet, Céline & Réquillart, Vincent, 2011. "Tax incidence with strategic firms on the soft drink market," TSE Working Papers 11-233, Toulouse School of Economics (TSE), revised Jul 2012.

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