Taxing Soft Drinks
This paper reviews the practice of levying an excise tax on soft drinks in sub-saharan African countries, and evaluates this practice against theoretical norms for levying an excise tax. The question is whether such taxes are justified or whether they are discriminatory and impose a welfare cost on the country. The paper concludes that the sin tax justification does not hold for soft drinks, nor do income distribution justifications. Arguably the best reason for such a levy is revenue, but this argument is weakened by a higher price elasticity of demand than usually supposed.
|Date of creation:||08 Apr 2011|
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- Richard M. Bird & Sally Wallace, 2003. "Taxing Alcohol in Africa: Reflections from International Experience," International Tax Program Papers 0304, International Tax Program, Institute for International Business, Joseph L. Rotman School of Management, University of Toronto, revised Nov 2003.
- Yacine Ait-Sahalia & Jonathan A. Parker & Motohiro Yogo, 2002.
"Luxury Goods and the Equity Premium,"
145, Princeton University, Woodrow Wilson School of Public and International Affairs, Discussion Papers in Economics.
- Roy Bahl & Richard Bird & Mary Beth Walker, 2003. "The Uneasy Case Against Discriminatory Excise Taxation: Soft Drink Taxes in Ireland," Public Finance Review, SAGE Publishing, vol. 31(5), pages 510-533, September.
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