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Title:The welfare effects of health-based food tax policy PDF Logo
Authors:Kotakorpi, Kaisa
Härkänen, Tommi
Pietinen, Pirjoq
Reinivuo, Heli
Suoniemi, Ilpo
Pirttilä, Jukka
Issue Date:2011
Series/Report no.:CESifo working paper: Public Finance 3633
Abstract:This paper examines the effects of health-oriented food tax reforms on the distribution of tax payments, food demand and health outcomes. Unlike earlier work, we also take into account the uncertainty related to both demand estimation and health estimates and report the confidence intervals for the overall health effects instead of only point estimates. A sugar tax of 1 € / kg reduces the incidence of type 2 diabetes on average by 13% and it also leads to a reduction in coronary heart disease. The health effects appear to be most pronounced for low-income individuals, and the reforms may therefore reduce health inequality. This effect undermines the traditional regressivity argument against the heavy taxation of unhealthy food.
Subjects:sin taxes
food taxation
tax incidence
commodity demand
obesity
diabetes
coronary heart disease
bootstrapping
JEL:H20
I14
I18
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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