The various impacts of Soft Drink Industry Levy in the UK and the consumers' perception

Al Kaddour, Mohamed (2018) The various impacts of Soft Drink Industry Levy in the UK and the consumers' perception

Abstract

This paper will analyse the potential health and economic effects of Soft Drinks Industry Levy, namely a sugar-sweetened beverage (SSB) tax, in the UK.
International evidence about the effects of SSB taxation on health and economy are reviewed and evaluated. In terms of effects on health, three determinants on demand side are own price elasticities, cross price elasticities and tax rates. A key determinant, pass through rate, on supply side is also identified. Generally, the SSB tax has a specific effect on price, demand and the potential for achieving health gains. In terms of tax effects on economy, three well-reckoned undesirable consequences are administrate cost, unemployment and reduced investment. Surprisingly, studies find that that these negative economic effects can be fairly limited.
Finally, potential effects of SDIL are discussed through contextualising past evidence with UK market data. The focus was given to industry responses as previous studies highlight that market adaption on the supply side was overlooked. Findings suggest that the levy is likely to achieve positive health outcomes, since manufactures and producers are actively reformulating sugar content and developing healthier products. However, economic consequences of the levy can be substantial and worse than expected due to uncertainties surrounding Brexit.
To investigate the relation between the soft drink tax and the consumption after considering the income level for targeted consumers, a questionnaire survey is currently conducting.

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Contributors

Author: Mohamed Al Kaddour

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