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The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare: Evidence from the French " Soda Tax"

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  • Fabrice Etilé

    (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

  • Sebastien Lecocq

    (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

  • Christine Boizot-Szantai

    (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique)

Abstract

The behavioural impact and acceptability of soft-drink taxes depend crucially on their incidence on consumer prices and welfare across socio-economic groups and markets. We use KantarWorldpanel homescan data to analyse the incidence of the 2012 French soda tax on Exact Price Indices (EPI) measuring consumer welfare from the availability and consumption of Sugar-Sweetened Beverages (SSB) and Non-Calorically Sweetened Beverages (NCSB) at a local geographical level. The soda tax has had significant, similar but small impacts on the EPI of SSB and NCSB (+4%), corresponding to an aggregate pass-through of about 40%. Tax incidence was slightly higher for low-income and high-consuming households. Retailers set higher pass-throughs in low-income, less-competitive and smaller markets. They did not change their product assortments. The lack of horizontal competition in low-income markets had a sizeable effect on tax regressivity. Finally, the negative income gradient in tax incidence was offset by a positive gradient in expected health benefits.

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  • Fabrice Etilé & Sebastien Lecocq & Christine Boizot-Szantai, 2018. "The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare: Evidence from the French " Soda Tax"," Working Papers halshs-01808198, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01808198
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    3. Le Bodo, Yann & Etilé, Fabrice & Julia, Chantal & Friant-Perrot, Marine & Breton, Eric & Lecocq, Sébastien & Boizot-Szantai, Christine & Bergeran, Céline & Jabot, Françoise, 2022. "Public health lessons from the French 2012 soda tax and insights on the modifications enacted in 2018," Health Policy, Elsevier, vol. 126(7), pages 585-591.
    4. Salgado, Juan Carlos & Ng, Shu Wen, 2019. "Understanding heterogeneity in price changes and firm responses to a national unhealthy food tax in Mexico," Food Policy, Elsevier, vol. 89(C).
    5. Hindriks, Jean & Serse, Valerio, 2019. "Heterogeneity in the tax pass-through to spirit retail prices: Evidence from Belgium," Journal of Public Economics, Elsevier, vol. 176(C), pages 142-160.
    6. Fabrice Etilé, 2019. "The Economics of Diet and Obesity: Public Policy," PSE-Ecole d'économie de Paris (Postprint) hal-02154445, HAL.
    7. Dickson, Alex & Gehrsitz, Markus & Kemp, Jonathan, 2021. "Does a Spoonful of Sugar Levy Help the Calories Go Down? An Analysis of the UK Soft Drinks Industry Levy," IZA Discussion Papers 14528, Institute of Labor Economics (IZA).
    8. Dickson, Alex & Gehrsitz, Markus & Kemp, Jonathan, 2022. "Does a Spoonful of Sugar Levy Help the Calories Go Down? An Analysis of the UK Soft Drinks Industry Levy," VfS Annual Conference 2022 (Basel): Big Data in Economics 264048, Verein für Socialpolitik / German Economic Association.
    9. Selina Gangl, 2021. "Do soda taxes affect the consumption and health of school-aged children? Evidence from France and Hungary," Papers 2111.14521, arXiv.org.
    10. Sara Capacci & Olivier Allais & Celine Bonnet & Mario Mazzocchi, 2019. "The impact of the French soda tax on prices and purchases. An ex post evaluation," PLOS ONE, Public Library of Science, vol. 14(10), pages 1-22, October.
    11. Christoph F. Kurz & Adriana N. König, 2021. "The causal impact of sugar taxes on soft drink sales: evidence from France and Hungary," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 22(6), pages 905-915, August.

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    Keywords

    Regressivity; Exact price index; Market structure; Tax incidence; Soft drink;
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