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The distributional consequences of a fiscal food policy: evidence from the UK

Tiffin, R. and Salois, M. (2015) The distributional consequences of a fiscal food policy: evidence from the UK. European Review of Agricultural Economics, 42 (3). pp. 397-417. ISSN 0165-1587

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To link to this item DOI: 10.1093/erae/jbu027

Abstract/Summary

The literature on fiscal food policies focuses on their effectiveness in altering diets and improving health, while this paper focuses on their welfare costs. A formal welfare economics framework is developed to calculate the combined individualistic and distributional impacts of a tax-subsidy. Distributional characteristics of foods targeted by a tax tend to be concentrated in lower-income households. Further, consumption of fruit and vegetables tends to be concentrated in higher-income households; therefore, a subsidy on such foods increases regressivity. Aggregate welfare changes that result from a fiscal food policy are found to range from an increase of 1.41 per cent to a reduction of 2.06 per cent according to whether a subsidy is included, the degree of inequality aversion, and whether substitution among foods is allowed.

Item Type:Article
Refereed:Yes
Divisions:Interdisciplinary centres and themes > Centre for Food Security
Faculty of Life Sciences > School of Agriculture, Policy and Development > Economic and Social Sciences Division > Food Economics and Marketing (FEM)
ID Code:37000
Uncontrolled Keywords:distributional characteristic, economic welfare, fat tax, indirect tax reform, obesity.
Publisher:Oxford University Press

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