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Adjusting VAT rates to promote healthier diets in Norway: A censored quantile regression approach

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  • Gustavsen, Geir Wæhler
  • Rickertsen, Kyrre

Abstract

The effects of health-related taxes and subsidies on food and beverages have mainly been investigated using models that assume identical price responses among high- and low-consuming households. Diet-related health problems are, however, more likely among households with high intakes of unhealthy foods or low intakes of healthy foods than in households with average intakes. In this article, we focus on purchases of healthy and unhealthy foods among low-, median-, and high-purchasing households. The effects of an increase in the Norwegian value-added tax (VAT) on some unhealthy foods and a removal of the VAT on some healthy foods are investigated. Using censored quantile regressions, we reject equality of the own-price elasticities for eight of nine food and beverage groups. We find that a VAT increase is more effective in reducing purchases of unhealthy foods among high-purchasing households than a VAT removal is in increasing the purchases of healthy foods among low-purchasing households.

Suggested Citation

  • Gustavsen, Geir Wæhler & Rickertsen, Kyrre, 2013. "Adjusting VAT rates to promote healthier diets in Norway: A censored quantile regression approach," Food Policy, Elsevier, vol. 42(C), pages 88-95.
  • Handle: RePEc:eee:jfpoli:v:42:y:2013:i:c:p:88-95
    DOI: 10.1016/j.foodpol.2013.07.001
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    References listed on IDEAS

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    1. repec:ipf:finteo:v:39:y:2015:i:3:p:115-137 is not listed on IDEAS
    2. Härkänen, Tommi & Kotakorpi, Kaisa & Pietinen, Pirjo & Pirttilä, Jukka & Reinivuo, Heli & Suoniemi, Ilpo, 2014. "The welfare effects of health-based food tax policy," Food Policy, Elsevier, vol. 49(P1), pages 196-206.
    3. Galarraga, Ibon & Abadie, Luis M. & Kallbekken, Steffen, 2016. "Designing incentive schemes for promoting energy-efficient appliances: A new methodology and a case study for Spain," Energy Policy, Elsevier, vol. 90(C), pages 24-36.
    4. Ibon Galarraga & Luis M. Abadie, 2014. "The use of “Bonus-Malus†schemes for promoting energy-efficient household appliances: a case study for Spain," Working Papers 2014-06, BC3.

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