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Distributional Effects of Taxation of Processed Foods in Brazil

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  • Dantas Pereira Coelho,Bernardo
  • Ivins,Courtney Price
  • Iunes,Roberto F.

Abstract

This paper examines the potential distributional effects of a tax increase on processed and ultra-processed foods. Using data from the most recent Brazilian consumption survey (POF 2017/2018), it analyzes the welfare changes that households would experience when facing increased costs for these products. Using an extended cost-benefit analysis model to assess net income effects, the paper considers three distinct dimensions: changes in product expenditure, changes in medical expenditure, and changes in years of life lost. The findings suggest that the tax increase would have a progressive impact, benefiting households at the lower end of the consumption distribution in all three dimensions. Overall, the study highlights the potential for targeted taxation policies as a “triple win” to address health concerns, promote greater equity, and increase fiscal revenues.

Suggested Citation

  • Dantas Pereira Coelho,Bernardo & Ivins,Courtney Price & Iunes,Roberto F., 2024. "Distributional Effects of Taxation of Processed Foods in Brazil," Policy Research Working Paper Series 10805, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10805
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    3. Fuchs,Alan, 2018. "The distributional effects of tobacco taxation: the evidence of white and clove cigarettes in Indonesia," Policy Research Working Paper Series 8558, The World Bank.
    4. Ashkan Afshin & José L Peñalvo & Liana Del Gobbo & Jose Silva & Melody Michaelson & Martin O'Flaherty & Simon Capewell & Donna Spiegelman & Goodarz Danaei & Dariush Mozaffarian, 2017. "The prospective impact of food pricing on improving dietary consumption: A systematic review and meta-analysis," PLOS ONE, Public Library of Science, vol. 12(3), pages 1-18, March.
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