Could Foods High in Fat, Sugar and Salt (HFSS) Taxes Improve Climate Health and Nutrition in Scotland?

Amarachi Nneli, Wisdom Dogbe and Cesar Revoredo-Giha

No 334527, 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK from Agricultural Economics Society - AES

Abstract: Foods high in fats, sugar and salt (HFSS) have huge impact on public health, climate health, and the economy. As such, it is critical to ascertain how pricing policies could help reduce their consumption in Scotland. This study analysed a secondary data of 3,260 households from Kantar Worldpanel which comprised of eighteen food categories consumed in Scotland. The primary objective is to simulate the implications of an excise tax imposed on HFSS on food purchases, climate health and consumer welfare using uncompensated own and cross price elasticities estimated from the Exact Affine Stone Index demand model. Two policy scenarios were considered: taxing all HFSS whilst the prices of the remaining foods remained unchanged; and taxing HFSS whilst subsidizing fruit and vegetables with the revenue generated. Results from the study indicate that imposing taxes on HFSS would reduce their consumption due to price effects. Also, a 10 percent tax on HFSS food groups while subsidising fruits and vegetables with the tax revenues simultaneously brought about a 5-9 percent decline in the consumption of HFFS and an 11 percent and 7 percent rise in vegetables and fruits consumption, respectively. Weekly per capita greenhouse gas emission could increase by 2 percent when fruits and vegetables are subsidised with the tax revenues rather than decrease by 3 percent when only HFSS food groups are taxed. Taxing HFSS without any subsidy policy in place was more regressive on consumers than when fruits and vegetables are subsidized. In conclusion, imposing a revenue-neutral HFSS tax policy would result in a trade-off between dietary, welfare and environmental goals. The policy scenario adopted by government would depend on the national goal being pursued.

Keywords: Food Consumption/Nutrition/Food Safety; Environmental Economics and Policy (search for similar items in EconPapers)
Pages: 23
Date: 2023-03
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aesc23:334527

DOI: 10.22004/ag.econ.334527

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