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Implications of a Sugar Tax in New Zealand: Incidence and Effectiveness

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Abstract

This paper has two aims. First, it surveys some of the literature on the likely effectiveness of sugar taxes as a policy instrument for reducing morbidity and mortality associated with obesity. There is a wide range of estimates among the literature of the price elasticity of demand for sugary products. A plurality of studies found that groups most at risk from obesity have greater price sensitivity. Studies also found there is a risk of consumers substituting unhealthy but non-taxed products for taxed products, negating any potential health improvements from a tax. The paper's second aim is to build on the literature review by analysing the possible incidence of a sugar tax in New Zealand, based on New Zealand household expenditure data. The empirical analysis presented is consistent with international evidence that a sugar tax would be regressive at the general population level.

Suggested Citation

  • Alasdair Gardiner, 2016. "Implications of a Sugar Tax in New Zealand: Incidence and Effectiveness," Treasury Working Paper Series 16/09, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:16/09
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    File URL: https://treasury.govt.nz/sites/default/files/2017-01/twp16-09.pdf
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    References listed on IDEAS

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    1. Robert H. Lustig & Laura A. Schmidt & Claire D. Brindis, 2012. "The toxic truth about sugar," Nature, Nature, vol. 482(7383), pages 27-29, February.
    2. Cliona Ni Mhurchu & Helen Eyles & Murat Genc & Peter Scarborough & Mike Rayner & Anja Mizdrak & Kelechi Nnoaham & Tony Blakely, 2015. "Effects of Health-Related Food Taxes and Subsidies on Mortality from Diet-Related Disease in New Zealand: An Econometric-Epidemiologic Modelling Study," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-17, July.
    3. Andreyeva, T. & Long, M.W. & Brownell, K.D., 2010. "The impact of food prices on consumption: A systematic review of research on the price elasticity of demand for food," American Journal of Public Health, American Public Health Association, vol. 100(2), pages 216-222.
    4. 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.
    5. Lin, Biing-Hwan & Smith, Travis A. & Lee, Jonq-Ying, 2010. "The Effects of a Sugar-Sweetened Beverage Tax: Consumption, Calorie Intake, Obesity, and Tax Burden by Income," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61167, Agricultural and Applied Economics Association.
    6. Franco Sassi, 2010. "Obesity and the Economics of Prevention," Books, Edward Elgar Publishing, number 14244.
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    More about this item

    Keywords

    Sugar sweetened beverages; tax progressivity;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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