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The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare:Evidence from the French “Soda Taxâ€

Etilé, F.;, Sébastien Lecocq and Boizot-Szantaï, C.;
Authors registered in the RePEc Author Service: Fabrice Etilé ()

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: The behavioural impact and acceptability of soft-drink taxes depend crucially on their incidence on consumer prices and welfare across socio-economic groups and markets. We use KantarWorldpanel homescan data to analyse the incidence of the 2012 French soda tax on Exact Price Indices (EPI) measuring consumer welfare from the availability and consumption of Sugar-Sweetened Beverages (SSB) and Non-Calorically Sweetened Beverages (NCSB) at a local geographical level. The soda tax has had significant, similar but small impacts on the EPI of SSB and NCSB (+4%), corresponding to an aggregate pass-through of about 40%. Tax incidence was slightly higher for low-income and high-consuming households. Retailers set higher pass-throughs in low-income, less-competitive and smaller markets. They did not change their product assortments. The lack of horizontal competition in low-income markets had a sizeable effect on tax regressivity. Finally, the negative income gradient in tax incidence was offset by a positive gradient in expected health benefits.

Keywords: tax incidence; soft drink; exact price index; regressivity; market structure (search for similar items in EconPapers)
JEL-codes: D12 E31 H22 I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2018-06
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