The Welfare Effects of Health-Based Food Tax Policy

Kaisa Kotakorpi (), Pirjo Pietinen, Jukka Pirttilä, Heli Reinivuo and Ilpo Suoniemi
Additional contact information
Kaisa Kotakorpi: Department of Economics, Turku School of Economics, 20014 University of Turku, Tel: +358-2-3339339.
Pirjo Pietinen: National Institute for Health and Welfare
Heli Reinivuo: National Institute for Health and Welfare

No 81, Discussion Papers from Aboa Centre for Economics

Abstract: This paper examines the effects of health-oriented food tax reforms on the distribution of tax payments, food demand and health outcomes. Unlike earlier work, we also take into account the uncertainty related to both demand estimation and health estimates and report the confidence intervals for the overall health effects instead of only point estimates. Taxation of sugar leads to a statistically significant reduction in both the incidence of type 2 diabetes and coronary heart disease. The health effects appear to be most pronounced for low-income individuals, and the reforms may therefore reduce health inequality. This effect undermines the traditional regressivity argument against the heavy taxation of unhealthy food.

Keywords: Sin taxes; food taxation; tax incidence; commodity demand; obesity; diabetes; coronary heart disease; bootstrapping (search for similar items in EconPapers)
JEL-codes: H20 I14 I18 (search for similar items in EconPapers)
Pages: 39
Date: 2012-12
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http://www.ace-economics.fi/kuvat/dp81.pdf (application/pdf)

Related works:
Journal Article: The welfare effects of health-based food tax policy (2014)
Working Paper: The Welfare Effects of Health-based Food Tax Policy (2011)
Working Paper: The Welfare Effects of Health-based Food Tax Policy (2011)
Working Paper: The Welfare Effects of Health-based Food Tax Policy (2011)
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