New IEA briefing explains why a sugar tax would be regressive & wrong

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 TelegraphCityAM and The Sun

To read the press release, click here.

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Head of Lifestyle Economics, IEA

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of publications including Sock Puppets, Euro Puppets, The Proof of the Pudding, The Crack Cocaine of Gambling and Free Market Solutions in Health.