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Taxing Food and Beverages: Theory, Evidence, and Policy
Author(s) -
Zheng Yuqing,
McLaughlin Edward W.,
Kaiser Harry M.
Publication year - 2013
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aas138
Subject(s) - excise , economics , sales tax , price elasticity of demand , tax policy , public economics , ad valorem tax , consumer demand , tax reform , microeconomics , business , macroeconomics
We developed a theoretical framework to examine the effect of a change in sales or excise tax on food and beverage demand after considering that consumers may have imperfect tax knowledge, are sometimes inattentive to sales tax, may not be informed of a sales tax change, and pay no sales tax on eligible food or beverages if using food stamps. We conducted simulations to assess how much the sales tax elasticity of demand should be adjusted downward from the price elasticity of demand and quantified the advantage of using an excise tax as an anti‐obesity policy.