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Corrective Taxation and Internalities from Food Consumption

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  • Rachel Griffith
  • Martin O’Connell
  • Kate Smith

Abstract

Corrective taxes have been implemented in a number of countries with the aim of addressing growing concern about the rise in obesity- and diet-related diseases. The rationale is that food consumption imposes costs on the consumer in the future that they do not fully take into account at the point of consumption (‘internalities’). Corrective taxes have the potential to improve welfare by reducing suboptimally high consumption. We review the literature on the size of these internalities and on the optimal corrective tax, which depends on the patterns of internalities, the price responsiveness of consumers, and on redistributive aims.

Suggested Citation

  • Rachel Griffith & Martin O’Connell & Kate Smith, 2018. "Corrective Taxation and Internalities from Food Consumption," CESifo Economic Studies, CESifo Group, vol. 64(1), pages 1-14.
    • Handle: RePEc:oup:cesifo:v:64:y:2018:i:1:p:1-14.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifx018
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    7. Peter Lloyd & Donald MacLaren, 2019. "Should We Tax Sugar and If So How?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 52(1), pages 19-40, March.
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    9. Andrew Fearne & Natalia Borzino & Beatrix De La Iglesia & Peter Moffatt & Margaret Robbins, 2022. "Using supermarket loyalty card data to measure the differential impact of the UK soft drink sugar tax on buyer behaviour," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(2), pages 321-337, June.
    10. SERSE Valerio,, 2019. "Do sugar taxes affect the right consumers ?," LIDAM Discussion Papers CORE 2019017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    More about this item

    Keywords

    corrective taxes; internality;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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