What is to be expected from food taxes?

Céline Bonnet and Vincent Réquillart

INRAE Sciences Sociales, 2014, vol. 2014, 4

Abstract: In the fight against rising obesity, public authorities have implemented policies over the last 10 years aiming to change food behaviours. In France, in 2001, the Health Minister launched the French National Nutritional Health Programme. Most of the political tools implemented aim to bring information to consumers in order to help them make more “sensible” choices from a nutritional point of view. However, the actions completed so far have not significantly slowed the growth in obesity. Other types of tools aiming to modify the consumer market environment have rarely been used. Among those, price changes via taxes or subsidies are often debated but rarely implemented. In Europe, several countries like Hungary, Finland or Denmark recently implemented taxes on products deemed to be harmful to the health. In France, since January 1st 2012, Non-Alcoholic Refreshing Beverages (NARB) have been taxed up to 7.16 €cents per litre. From the French example, we present a synthesis of the potential effects of the implementation of nutritional taxes. Since there are few examples of implementation of nutritional taxes, most analyses of their potential impact on consumption and health are ex ante, relying on simulations. The models used, estimated on past consumption observations, enable assessments of consumption changes induced by the price changes of one or several goods. The studies on the French case integrate not only consumers’ reactions to the price changes of goods but also the impact of the implementation of the tax on product prices, and that is its main originality. Beverage producers and retailers may partially offset the tax by reducing their margins, or pass on more than the tax amount to the final price by increasing their margins. Our work shows that these price adjustment strategies depend on the type of tax implemented. It also enables the assessment of the impact of tax on sugar consumption through beverages by integrating the transfer of consumption between various types of beverages.

Keywords: Agricultural and Food Policy; Consumer/Household Economics; Demand and Price Analysis; Food Consumption/Nutrition/Food Safety (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:ags:inrass:252685

DOI: 10.22004/ag.econ.252685

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