A note on sugar taxes and changes in total calorie consumption

John Creedy

New Zealand Economic Papers, 2019, vol. 53, issue 3, 307-314

Abstract: This paper demonstrates the potential importance, when considering total calorie intake, of allowing for the substitution effects of imposing a selective tax on a commodity having a high sugar content, when non-taxed commodities exist and also have relatively high calorie content. A framework is presented which allows the elasticity of calorie consumption with respect to a price change to be derived. This brings out the role of relative budget shares, relative calorie content of goods and relative prices to be clearly seen, along with own- and cross-price elasticities. Their absolute values for each commodity group are not required. It is demonstrated that the focus of attention needs to be much wider than a simple concentration on the own-price elasticity of demand for the commodity group for which a sumptuary tax is envisaged.

Date: 2019
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DOI: 10.1080/00779954.2018.1516232

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