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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, 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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    References listed on IDEAS

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    Cited by:

    1. Elodie Letort & Fanny Le Gloux & Pierre Dupraz, 2021. "Environmental and health labelling : and opportunity for the provision of agrienvironmental-climate public goods?," Post-Print hal-03338439, HAL.
    2. Daniel John Zizzo & Melanie Parravano & Ryota Nakamura & Suzanna Forwood & Marc Suhrcke, 2021. "The impact of taxation and signposting on diet: an online field study with breakfast cereals and soft drinks," Experimental Economics, Springer;Economic Science Association, vol. 24(4), pages 1294-1324, December.
    3. 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.
    4. 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).
    5. Paul Calcott, 2022. "Regulating ingredients in sin goods," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(3), pages 1120-1139, May.
    6. Rosella Levaggi & Carmen Marchiori & Paolo Panteghini, 2020. "Lifestyle Taxes in the Presence of Profit Shifting," CESifo Working Paper Series 8138, CESifo.
    7. Cherchye, Laurens & De Rock, Bram & Griffith, Rachel & O’Connell, Martin & Smith, Kate & Vermeulen, Frederic, 2020. "A new year, a new you? Within-individual variation in food purchases," European Economic Review, Elsevier, vol. 127(C).
    8. Rachel Griffith & Victoria Jenneson & Joseph James & Anna Taylor, 2021. "The impact of a tax on added sugar and salt," IFS Working Papers W21/21, Institute for Fiscal Studies.
    9. Zarko Kalamov & Marco Runkel, 2018. "Paternalistic Taxation of Unhealthy Food and the Intensive versus Extensive Margin of Obesity," CESifo Working Paper Series 6911, CESifo.

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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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