Taxing Sugar and Sugary Products to Reduce Obesity: A CGE Assessment of Several Tax Policies

Adopting an original approach with the use of a Computable General Equilibrium trade model, we propose a new assessment of several tax policies on sugar and sugary products to fight obesity. We emphasize our study on the effects of these taxes on production and trade. We compare an homogeneous tax on the final consumption of products with high sugar content against a tax on sugar as an intermediate consumption, associated or not with a complementary specific tax on final consumptions of sugar. The most efficient tax scheme appears to be the specific tax on sugar as an intermediate consumption in the production of food products, complemented by a tax of the same amount on final consumptions of sugar. A tax on the final consumption of sugar rich products leads to a reduction of the sugar intake through a decrease of the quantities of sugar rich products consumed, whereas a tax on sugar as an intermediate consumption mostly reduce the sugar content of food products. Such tax schemes would be in most cases detrimental to the agricultural and food processing sectors of most countries. These negative impacts can be reinforced when the taxes are implemented collectively around the World, highlighting some possible competitive effects.