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Implications of a Sugar Tax in New Zealand: Incidence and Effectiveness

Author

Abstract
This paper has two aims. First, it surveys some of the literature on the likely effectiveness of sugar taxes as a policy instrument for reducing morbidity and mortality associated with obesity. There is a wide range of estimates among the literature of the price elasticity of demand for sugary products. A plurality of studies found that groups most at risk from obesity have greater price sensitivity. Studies also found there is a risk of consumers substituting unhealthy but non-taxed products for taxed products, negating any potential health improvements from a tax. The paper's second aim is to build on the literature review by analysing the possible incidence of a sugar tax in New Zealand, based on New Zealand household expenditure data. The empirical analysis presented is consistent with international evidence that a sugar tax would be regressive at the general population level.

Suggested Citation

  • Alasdair Gardiner, 2016. "Implications of a Sugar Tax in New Zealand: Incidence and Effectiveness," Treasury Working Paper Series 16/09, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:16/09
    as

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    File URL: https://treasury.govt.nz/sites/default/files/2017-01/twp16-09.pdf
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    References listed on IDEAS

    as
    1. Robert H. Lustig & Laura A. Schmidt & Claire D. Brindis, 2012. "The toxic truth about sugar," Nature, Nature, vol. 482(7383), pages 27-29, February.
    2. Cliona Ni Mhurchu & Helen Eyles & Murat Genc & Peter Scarborough & Mike Rayner & Anja Mizdrak & Kelechi Nnoaham & Tony Blakely, 2015. "Effects of Health-Related Food Taxes and Subsidies on Mortality from Diet-Related Disease in New Zealand: An Econometric-Epidemiologic Modelling Study," PLOS ONE, Public Library of Science, vol. 10(7), pages 1-17, July.
    3. Andreyeva, T. & Long, M.W. & Brownell, K.D., 2010. "The impact of food prices on consumption: A systematic review of research on the price elasticity of demand for food," American Journal of Public Health, American Public Health Association, vol. 100(2), pages 216-222.
    4. Zhen Miao & John C. Beghin & Helen H. Jensen, 2013. "Accounting For Product Substitution In The Analysis Of Food Taxes Targeting Obesity," Health Economics, John Wiley & Sons, Ltd., vol. 22(11), pages 1318-1343, November.
    5. Lin, Biing-Hwan & Smith, Travis A. & Lee, Jonq-Ying, 2010. "The Effects of a Sugar-Sweetened Beverage Tax: Consumption, Calorie Intake, Obesity, and Tax Burden by Income," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61167, Agricultural and Applied Economics Association.
    6. Franco Sassi, 2010. "Obesity and the Economics of Prevention," Books, Edward Elgar Publishing, number 14244.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Sugar sweetened beverages; tax progressivity;

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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