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Taxing Sweets: Sweetener Input Tax or Final Consumption Tax?

  • Miao, Zhen
  • Beghin, John C.
  • Jensen, Helen H.

In order to reduce obesity and associated costs, policymakers are considering various policies, including taxes, to change consumers' high-calorie consumption habits. We investigate two tax policies aimed at reducing added sweetener consumption. Both a consumption tax on sweet goods and a sweetener input tax can reach the same policy target of reducing added sweetener consumption. Both tax instruments are regressive, but the associated surplus losses are limited. The tax on sweetener inputs targets sweeteners directly and causes about five times less surplus loss than the final consumption tax. Previous analyses have overlooked this important point.

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File URL: http://www2.econ.iastate.edu/papers/p12670-2011-03-27.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 32670.

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Date of creation: 27 Mar 2011
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Publication status: Published in Contemporary Economic Policy 2012, vol. 30 no. 3, pp. 344-361
Handle: RePEc:isu:genres:32670
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Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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Web page: http://www.econ.iastate.edu
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