Taxing food and soft drinks in the name of obesity is not a new idea. Dozens of jurisdictions have experimented with such taxes over the years, allowing economists to study their impact. The results have consistently showed the following:

• Demand for sugary drinks, snacks and fatty foods is inelastic. People tend to be quite unresponsive to price hikes and do not significantly change their shopping habits.


• Consumers respond to switching to cheaper brands of the product or shopping in cheaper shops. This leads to the consumption of inferiror goods rather than the consumption of fewer calories.


• Consumers respond by switching to cheaper brands of the product or shopping in cheaper shops. This leads to the consumption of inferior goods rather than the consumption of fewer calories.


• Taxes on sugary drinks lead consumers to switch to other high calorie drinks such as fruit juice, milk or alcohol.


• Taxes on energy-dense food and soft drinks take a greater share of income from the poor than the rich. This regressive effect is exacerbated by low income consumers being less reponsive to price changes than the rich.


• No impact on obesity or health outcomes has ever been found.

This paper was featured in The Telegraph, CityAM and The Sun

To read the press release, click here.

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