Sugar Taxes and Changes in Total Calorie Consumption: A Simple Framework

John Creedy

No 16/06, Treasury Working Paper Series from New Zealand Treasury

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.

Keywords: Sugar-sweetened beverage; calorie intake; demand elasticity (search for similar items in EconPapers)
JEL-codes: H2 H31 I10 (search for similar items in EconPapers)
Pages: 11
Date: 2016-12
New Economics Papers: this item is included in nep-agr and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:nzt:nztwps:16/06

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