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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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Web page: http://www.econ.iastate.edu
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  1. 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.
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Cited by:
  1. Bonnet, Céline & Réquillart, Vincent, 2013. "Tax incidence with strategic firms in the soft drink market," Journal of Public Economics, Elsevier, Elsevier, vol. 106(C), pages 77-88.
  2. Beghin, John C. & Elobeid, Amani, 2013. "The Impact of the U.S. Sugar Program Redux," Staff General Research Papers, Iowa State University, Department of Economics 36172, Iowa State University, Department of Economics.
  3. Zhen Miao & John C. Beghin & Helen H. Jensen, 2011. "Accounting for Product Substitution in the Analysis of Food Taxes Targeting Obesity," Center for Agricultural and Rural Development (CARD) Publications 10-wp518, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  4. Okrent, Abigail M. & Alston, Julian M., 2011. "The Effects of Farm Commodity and Retail Food Policies on Obesity and Economic Welfare in the United States," Working Papers, Robert Mondavi Institute Center for Wine Economics 162516, Robert Mondavi Institute Center for Wine Economics.

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