Study Notes
Sugar (Soda) Taxes (Government Intervention)
- Level:
- AS, A-Level, IB
- Board:
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 8 Jan 2020
In 2018, the UK government introduced a tax on high-sugar drinks and some campaigners are lobbying for this indirect tax to be extended to other foods including snacks and cereals that have a high sugar content.
Is this an effective and equitable form of government intervention in a market to achieve desired changes in consumer behaviour? This study note brings together some useful resources on the issue. We have a collection of curated articles and study notes on the economics of a sugar tax available from this link.
Arguments in favour of a sugar tax:
- External costs of sugary drinks – externalities are a cause of market failure
- Information failures – people often under-estimate the long term costs to their own healthcare of eating high sugar foods and drinks
- Sugar tax raises revenue – this might be ring-fenced for other projects such as increased funding for school and community sports facilities
- Tax encourages producers to re-formulate drinks - i.e. make them healthier by reducing the sugar content. There is substantial evidence that this has happened with high sugar drinks.
Independent: 20% snack tax could have huge impact on UK obesity (2019)
BBC: Efforts to cut sugar out of food way off target
![](https://tutor2u-net.imgix.net/subjects/economics/chartoftheday_3640_annual_death_rate_from_sugary_drinks_n.jpg?auto=compress%2Cformat&fit=clip&q=80&w=800)
Points against the introduction of a sugar tax
- Might be regressive on lower income families i.e. they face a higher burden from the tax
- Other policies might be more effective in cutting consumption in the long run
- People might simply switch to other sugary products
- Risk of lost jobs in pubs and shops that rely heavily on drink and confectionery sales
![](https://tutor2u-net.imgix.net/subjects/economics/statistic_id549364_action-to-highlight-sugar-content-in-food-and-drinks-in-the-united-kingdom-2016.png?auto=compress%2Cformat&fit=clip&q=80&w=800)
![](https://tutor2u-net.imgix.net/subjects/economics/statistic_id659856_united-kingdom_-change-in-average-price-of-soft-drinks-after-sugar-tax-2016.png?auto=compress%2Cformat&fit=clip&q=80&w=800)
![](https://tutor2u-net.imgix.net/subjects/economics/chartoftheday_4555_how_much_sugar_does_an_energy_drink_really_have_n.jpg?auto=compress%2Cformat&fit=clip&q=80&w=800)
You might also like
![](https://tutor2u-net.imgix.net/user-photos/eventhost-RuthTarrant.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
Preventing sunburn by changing habits
7th September 2015
Financial Market Failure (Financial Economics)
Study Notes
![](https://tutor2u-net.imgix.net/user-photos/host-jimriley.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
Evidence based policies are often built on sand
2nd August 2017
![](https://tutor2u-net.imgix.net/user-photos/host-jimriley.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
Pork Barrel Politics and the Principal Agent Problem
7th February 2018
Indirect Taxes
Topic Videos
Subsidies - 2021 Revision Update
Study Notes
Welfare Loss from Monopoly Pricing
Topic Videos
![](https://tutor2u-net.imgix.net/user-photos/graham-watson.png?auto=compress%2Cformat&crop=focalpoint&fit=crop&fp-x=0.5&fp-y=0.5&h=100&q=80&w=100)
Bus fares in England to be capped at £2 per journey for 3 months
3rd September 2022