The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare: Evidence from the French " Soda Tax"

Fabrice Etilé (1, 2, 3) , Sebastien Lecocq (3) , Christine Boizot-Szantai (3)

1 PJSE - Paris Jourdan Sciences Economiques
2 PSE - Paris School of Economics
3 ALISS - Alimentation et sciences sociales

The behavioural impact and acceptability of soft-drink taxes depend crucially on their incidence on consumer prices and welfare across socio-economic groups and markets. We use KantarWorldpanel homescan data to analyse the incidence of the 2012 French soda tax on Exact Price Indices (EPI) measuring consumer welfare from the availability and consumption of Sugar-Sweetened Beverages (SSB) and Non-Calorically Sweetened Beverages (NCSB) at a local geographical level. The soda tax has had significant, similar but small impacts on the EPI of SSB and NCSB (+4%), corresponding to an aggregate pass-through of about 40%. Tax incidence was slightly higher for low-income and high-consuming households. Retailers set higher pass-throughs in low-income, less-competitive and smaller markets. They did not change their product assortments. The lack of horizontal competition in low-income markets had a sizeable effect on tax regressivity. Finally, the negative income gradient in tax incidence was offset by a positive gradient in expected health benefits.

Mots clés: Regressivity; Exact price index; Market structure; Tax incidence; Soft drink

Domaines: Economies et finances

Fabrice Etilé, Sebastien Lecocq, Christine Boizot-Szantai. The Incidence of Soft-Drink Taxes on Consumer Prices and Welfare: Evidence from the French " Soda Tax". 2018. ⟨halshs-01808198⟩