Economics > tax policies and sugar-sweetened beverages

Changing food tax policy has been proposed as a potential mechanism for improving food choices and population diet. Although there is limited evidence in this area for food, the use of tax policy to improve public health has effectively reduced consumption of cigarettes and alcohol.

Current food tax policy proposals include two methods of raising prices of unhealthy foods with the aim of reducing purchases of such foods. One approach is to tax foods with poor nutrient profiles, such as foods high in saturated fat or sugar. An alternative approach is to impose a tax on unhealthy food categories, such as carbonated drinks or snacks.

Taxes on unhealthy foods would be regressive, affecting disproportionately stronger low-income populations who are important consumers of such foods and at the same time more sensitive to changes in prices. With this consideration, proponents of unhealthy foods taxation have proposed providing subsidies to low-income individuals for purchases of healthy fare like fruit and vegetables.

Inferences about the effects of tax policy rely on assumptions about the effects of food prices on purchases and finally consumption patterns. The Rudd Center is committed to expanding the knowledge base about the role of food prices in affecting food choices to inform future policy decisions in this area.