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The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare:Evidence from the French “Soda Taxâ€

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  • Etilé, F.;
  • Lecocq, S.;
  • Boizot-Szantaï, C.;

Abstract

The behavioural impact and acceptability of soft-drink taxes depend crucially on their incidence on consumer prices and welfare across socio-economic groups and markets. We use KantarWorldpanel homescan data to analyse the incidence of the 2012 French soda tax on Exact Price Indices (EPI) measuring consumer welfare from the availability and consumption of Sugar-Sweetened Beverages (SSB) and Non-Calorically Sweetened Beverages (NCSB) at a local geographical level. The soda tax has had significant, similar but small impacts on the EPI of SSB and NCSB (+4%), corresponding to an aggregate pass-through of about 40%. Tax incidence was slightly higher for low-income and high-consuming households. Retailers set higher pass-throughs in low-income, less-competitive and smaller markets. They did not change their product assortments. The lack of horizontal competition in low-income markets had a sizeable effect on tax regressivity. Finally, the negative income gradient in tax incidence was offset by a positive gradient in expected health benefits.

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  • Etilé, F.; & Lecocq, S.; & Boizot-Szantaï, C.;, 2018. "The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare:Evidence from the French “Soda Taxâ€," Health, Econometrics and Data Group (HEDG) Working Papers 18/13, HEDG, c/o Department of Economics, University of York.
    • Handle: RePEc:yor:hectdg:18/13
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    Cited by:

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    2. Dickson, Alex & Gehrsitz, Markus & Kemp, Jonathan, 2022. "Does a Spoonful of Sugar Levy Help the Calories Go Down? An Analysis of the UK Soft Drinks Industry Levy," VfS Annual Conference 2022 (Basel): Big Data in Economics 264048, Verein für Socialpolitik / German Economic Association.
    3. Christoph F. Kurz & Adriana N. König, 2021. "The causal impact of sugar taxes on soft drink sales: evidence from France and Hungary," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(6), pages 905-915, August.
    4. Sara Capacci & Olivier Allais & Celine Bonnet & Mario Mazzocchi, 2019. "The impact of the French soda tax on prices and purchases. An ex post evaluation," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-22, October.
    5. Hindriks, Jean & Serse, Valerio, 2019. "Heterogeneity in the tax pass-through to spirit retail prices: Evidence from Belgium," Journal of Public Economics, Elsevier, vol. 176(C), pages 142-160.
    6. Salgado, Juan Carlos & Ng, Shu Wen, 2019. "Understanding heterogeneity in price changes and firm responses to a national unhealthy food tax in Mexico," Food Policy, Elsevier, vol. 89(C).
    7. Gonçalves, Judite & Pereira dos Santos, João, 2020. "Brown sugar, how come you taste so good? The impact of a soda tax on prices and consumption," Social Science & Medicine, Elsevier, vol. 264(C).

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    More about this item

    Keywords

    tax incidence; soft drink; exact price index; regressivity; market structure;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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