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Taxing sweets: sweetener input tax or final consumption tax?

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

Abstract

Policymakers are considering various policies to reduce obesity and its associated costs, including consumption taxes on high-calorie foods and specifically sweetened foods. We investigate two tax policies to reduce added sweetener consumption: a consumption tax on sweetened goods and a sweetener input tax. Both tax instruments can reach the same policy target of reducing added sweetener consumption and are found to be regressive. The tax on sweetener inputs targets sweeteners directly and leads to a loss in consumer surplus that is only one-fifth of that caused by the final consumption tax. Previous analyses have overlooked this important point.

Suggested Citation

  • Miao, Zhen & Beghin, John C. & Jensen, Helen H., 2012. "Taxing sweets: sweetener input tax or final consumption tax?," ISU General Staff Papers 201207010700001121, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201207010700001121
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    Cited by:

    1. John C. Beghin & Amani Elobeid, 2015. "The Impact of the U.S. Sugar Program Redux," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(1), pages 1-33.
    2. John C. Beghin & Amani Elobeid, 2015. "The Impact of the U.S. Sugar Program Redux," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 37(1), pages 1-33.
    3. Zhen Miao & John C. Beghin & Helen H. Jensen, 2013. "Accounting For Product Substitution In The Analysis Of Food Taxes Targeting Obesity," Health Economics, John Wiley & Sons, Ltd., vol. 22(11), pages 1318-1343, November.
    4. Abigail M. Okrent & Julian M. Alston, 2012. "The Effects of Farm Commodity and Retail Food Policies on Obesity and Economic Welfare in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(3), pages 611-646.
    5. Riera-Crichton, Daniel & Tefft, Nathan, 2014. "Macronutrients and obesity: Revisiting the calories in, calories out framework," Economics & Human Biology, Elsevier, vol. 14(C), pages 33-49.
    6. Vardges Hovhannisyan & Christopher T. Bastian, 2023. "New insights into the structure of consumer preferences for natural and artificial sweeteners," American Journal of Agricultural Economics, John Wiley & Sons, vol. 105(5), pages 1491-1515, October.
    7. Balagtas, Joseph V. & Nuno-Ledesma, Jose G. & Wu, Steven Y., 2016. "Effects of “Fat Taxes” on Package Sizes, and Welfare Distribution," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 252704, Agricultural and Applied Economics Association.
    8. Bonnet, Céline & Réquillart, Vincent, 2011. "Strategic Pricing and Health Price Policies," IDEI Working Papers 671, Institut d'Économie Industrielle (IDEI), Toulouse, revised Jul 2012.
    9. A. Malek Hammami & John C. Beghin, 2021. "The trade and welfare impacts of the U.S. retaliatory tariff on EU olive oil," Agricultural Economics, International Association of Agricultural Economists, vol. 52(5), pages 807-818, September.
    10. Bonnet, Céline & Réquillart, Vincent, 2013. "Tax incidence with strategic firms in the soft drink market," Journal of Public Economics, Elsevier, vol. 106(C), pages 77-88.
    11. Lionel Cosnard, 2019. "Taxing Sugar and Sugary Products to Reduce Obesity: A CGE Assessment of Several Tax Policies," Post-Print hal-03148821, HAL.
    12. Cosnard, Lionel & Laborde, David, 2019. "Taxing Sugar and Sugary Products to Reduce Obesity: A CGE Assessment of Several Tax Policies," Conference papers 333067, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Lakkakula, Prithviraj & Schmitz, Andrew & Ripplinger, David, 2016. "U.S. Sweetener Demand Analysis: A QUAIDS Model Application," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 41(3), pages 1-16, September.
    14. Petra Salamon & Martin Banse & Jesus Barreiro Hurle & Ondrej Chaloupka & Trevor Donnellan & Emil Erjavec & Thomas Fellmann & Kevin Hanrahan & Marlen Hass & Roel Jongeneel & Verena Laquai & Myrna van L, 2017. "Unveiling diversity in agricultural markets projections: from EU to Member States. A medium-term outlook with the AGMEMOD model," JRC Research Reports JRC109115, Joint Research Centre.
    15. Chen, Xiu & Kaiser, Harry M. & Rickard, Bradley J., 2015. "The impacts of inclusive and exclusive taxes on healthy eating: An experimental study," Food Policy, Elsevier, vol. 56(C), pages 13-24.

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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