Taxing Food and Beverages: Theory, Evidence, and Policy

Yuqing Zheng, Edward W. McLaughlin and Harry Kaiser

American Journal of Agricultural Economics, 2013, vol. 95, issue 3, 705-723

Abstract: We developed a theoretical framework to examine the effect of a change in sales or excise tax on food and beverage demand after considering that consumers may have imperfect tax knowledge, are sometimes inattentive to sales tax, may not be informed of a sales tax change, and pay no sales tax on eligible food or beverages if using food stamps. We conducted simulations to assess how much the sales tax elasticity of demand should be adjusted downward from the price elasticity of demand and quantified the advantage of using an excise tax as an anti-obesity policy. Copyright 2013, Oxford University Press.

Date: 2013
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