Politics‘Sin Taxes’ less effective if not rolled out across...

‘Sin Taxes’ less effective if not rolled out across a Wide Area

-

- Advertisment -sslate

Surcharges on products considered to be unhealthy, such as tobacco and sugar, only work well if applied on a large geographical scale, reveals research from Imperial College Business School.

In the paper, The Impact of Soda Taxes: Pass-Through, Tax Avoidance, and Nutritional Effects, published in the Journal of Marketing Research, Stephan Seiler, Associate Professor of Marketing at Imperial College Business School, evaluated the effectiveness of ‘sin taxes’ in both improving consumer decision-making and generating revenue.

Taxes such as these are often implemented in the hope of encouraging better choices from shoppers or failing that, providing a financial boost for governments.

However, in places such as parts of the USA, such taxes are imposed at a local level rather than nationwide.

In testing the effectiveness of surcharges on unhealthy products, Dr Seiler, alongside authors from Northwestern University and Washington University, evaluated the impact of the tax imposed on sweetened beverages in the City of Philadelphia. The tax was applied to both sugar-sweetened beverages and artificially-sweetened drinks, but only within city limits.

The researchers looked at data on prices, quantities-sold and the nutritional value of several thousand taxed and untaxed beverages on sale across a large set of stores in Philadelphia. They found that, once the surcharge had been implemented, demand for the newly-taxed drinks dropped by 46%.

However, when this figure was added to data from stores no more than six miles outside of Philadelphia City, total sales of sweetened drinks fell by only 22%. The study also revealed that some of the stores just outside of the city had seen a noticeable increase in the sales of sweetened drinks.

sin tax

According to the researchers, in comparing these figures, it’s clear that numerous consumers had travelled further, going beyond the city limits to avoid the surcharge, offsetting the impact of the sin tax.

Using the evidence found, the researchers suggest that taxes such as these, applied to improve consumer decision-making, are of limited effectiveness when applied only on a localised level. This is because, as seen in the case of Philadelphia’s sweetened beverage tax, when faced with a large enough levy, consumers are prepared to travel further in order to avoid the tax all together.

On this basis, the researchers conclude that the geographical coverage of future tariffs should be a key issue that policy-makers consider.

Dr Stephan Seiler, Associate Professor of Marketing at Imperial College Business School, said:

“Regardless of how one feels about the goals of sin taxes, a local tax that many consumers avoid is always undesirable. Tax avoidance through cross-shopping leads to lower revenue, less improvement in nutritional intake and burdens consumers who now how to travel further for their purchases.”

The research paper, The Impact of Soda Taxes: Pass-Through, Tax Avoidance, and Nutritional Effects, was published in the Journal of Marketing Research.

Sunshine Slate
Sunshine Slatehttps://www.sunshineslate.com
Sunshine Slate is your news, entertainment, music fashion website. We provide you with the latest breaking news and videos straight from the United States of America.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest news

The Benefits of Booking Your Holy Journey in Advance for 2024

If you are planning to do Umrah for the first time, several things might confuse you.

Heat crisis in Florida prisons: Lawmakers urged to add air conditioning

Florida lawmakers are being asked to use the winter months to swiftly install air conditioning in prison housing units before the return of scorching summer temperatures.

Which Natural Stone is Best for Your Kitchen Benchtops?

By the end of this post, you will have a better understanding of the pros and cons of each natural stone option, and you will be able to make an informed decision for your kitchen renovation project.

Network Readiness Index 2023: U.S. still #1, U.K. climbs to #10

Network Readiness Index 2023: U.S. still #1, U.K. climbs to #10, and China among top 20 despite advanced economies leading the way in network readiness
- Advertisement -

Community activists engage in hands-on beach cleanup Initiative

environmental activist Merle Liivand has seen a rise in plastic waste while navigating the Intracoastal canals of South Florida over the years and has decided to take action.

Building Success: Essential Reads for Every Startup Leader’s Bookshelf (Expert Answers)

To help you get started, here's a list of six must-have books that offer valuable insights, guidance, and inspiration for those steering the ship in the ever-evolving world of startups.
edealo.com
- Advertisement - Motel 6
transformerscon

Must read

Best Apps and Games for your New Mobile Phone

We can install any app from the google play store very quickly. Let’s take a look at some most amazing apps for android mobile phones.

Tips and Tricks For Maximising Business Productivity with Dynamics 365

As a result, let’s discuss leveraging Dynamics 365 to its fullest potential. We'll uncover tips and tricks that not only enhance your understanding of this dynamic solution but also amplify its impact on your business.
- Advertisement -
- Advertisement -sslate

You might also likeRELATED
Recommended to you