The Welfare Effects of Health-Based Food Tax Policy
AbstractThis paper examines the effects of health-oriented food tax reforms on the distribution of tax payments, food demand and health outcomes. Unlike earlier work, we also take into account the uncertainty related to both demand estimation and health estimates and report the confidence intervals for the overall health effects instead of only point estimates. Taxation of sugar leads to a statistically significant reduction in both the incidence of type 2 diabetes and coronary heart disease. The health effects appear to be most pronounced for low-income individuals, and the reforms may therefore reduce health inequality. This effect undermines the traditional regressivity argument against the heavy taxation of unhealthy food.
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Bibliographic InfoPaper provided by Aboa Centre for Economics in its series Discussion Papers with number 81.
Date of creation: Dec 2012
Date of revision:
Sin taxes; food taxation; tax incidence; commodity demand; obesity; diabetes; coronary heart disease; bootstrapping;
Other versions of this item:
- Kaisa Kotakorpi & Tommi Härkänen & Pirjo Pietinen & Heli Reinivuo & Ilpo Suoniemi & Jukka Pirttilä, 2011. "The Welfare Effects of Health-based Food Tax Policy," CESifo Working Paper Series 3633, CESifo Group Munich.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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