THE EFFECTS OF A SOFT DRINK TAX IN THE UK
Article first published online: 26 MAR 2014
Copyright © 2014 John Wiley & Sons, Ltd.
How to Cite
Tiffin, R., Kehlbacher, A. and Salois, M. (2014), THE EFFECTS OF A SOFT DRINK TAX IN THE UK. Health Econ.. doi: 10.1002/hec.3046
- Article first published online: 26 MAR 2014
- Manuscript Accepted: 7 FEB 2014
- Manuscript Revised: 4 FEB 2014
- Manuscript Received: 17 DEC 2012
- soft drinks;
- tax policy;
- quadratic almost ideal demand;
- Kantar World Panel
The majority of the UK population is either overweight or obese. Health economists, nutritionists and doctors are calling for the UK to follow the example of other European countries and introduce a tax on soft drinks as a result of the perception that high intakes contribute to diet-related disease. We use a demand model estimated with household-level data on beverage purchases in the UK to investigate the effects of a tax on soft drink consumption. The model is a Quadratic Almost Ideal Demand System, and censoring is handled by applying a double hurdle. Separate models are estimated for low, moderate and high consumers to allow for a differential impact on consumption between these groups. Applying different hypothetical tax rates, we conclude that understanding the nature of substitute/complement relationships is crucial in designing an effective policy as these relationships differ between consumers depending on their consumption level. The overall impact of a soft drink tax on calorie consumption is likely to be small. Copyright © 2014 John Wiley & Sons, Ltd.