Abstract

http://ssrn.com/abstract=1959273
 


 



The Welfare Effects of Health-Based Food Tax Policy


Kaisa Kotakorpi


University of Turku - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Tommi Härkänen


Government of the Republic of Finland - National Institute for Health and Welfare

Pirjo Pietinen


Government of the Republic of Finland - National Institute for Health and Welfare

Heli Reinivuo


affiliation not provided to SSRN

Ilpo Suoniemi


Labour Institute for Economic Research

Jukka Pirttila


United Nations - World Institute for Development Economics Research (UNU/WIDER); Tampere University of Technology

November 14, 2011

CESifo Working Paper Series No. 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.

Number of Pages in PDF File: 30

Keywords: sin taxes, food taxation, tax incidence, commodity demand, obesity, diabetes, coronary heart disease, bootstrapping

JEL Classification: H200, I140, I180

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Date posted: November 14, 2011  

Suggested Citation

Kotakorpi, Kaisa and Härkänen, Tommi and Pietinen, Pirjo and Reinivuo, Heli and Suoniemi, Ilpo and Pirttila, Jukka, The Welfare Effects of Health-Based Food Tax Policy (November 14, 2011). CESifo Working Paper Series No. 3633. Available at SSRN: http://ssrn.com/abstract=1959273

Contact Information

Kaisa Kotakorpi
University of Turku - Department of Economics ( email )
Turku
Finland
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Tommi Härkänen
Government of the Republic of Finland - National Institute for Health and Welfare
Helsinki
Finland
Pirjo Pietinen
Government of the Republic of Finland - National Institute for Health and Welfare
Helsinki
Finland
Heli Reinivuo
affiliation not provided to SSRN
Ilpo Suoniemi
Labour Institute for Economic Research ( email )
Jukka Pirttila (Contact Author)
United Nations - World Institute for Development Economics Research (UNU/WIDER) ( email )
Katajanokanlaituri 6B
Helsinki, FIN-00160
Finland
Tampere University of Technology ( email )
P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland
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