Will the new sugar tax affect the poor disproportionally?
Recent announcements by the Minister of Finance during his annual budget speech, provided more information about the structure of the proposed sugar tax. This research note deals with one specific issue: will the tax be regressive, i.e. will it disproportionately affect the poor? This is an important issue in a country plagued by high levels of inequality. In short, we find that since the tax structure is such that it will be levied on the sugar content (grams of sugar / 100ml), it will increase the price of cheaper beverages disproportionately, yielding higher price increases for value brands (assuming the sugar content is the same). We consider specific brands below and consider the consumption distribution in order to analyse the effects on the poor in more detail. The aim is to contribute to the ongoing policy debate by providing further analysis based on detailed consumption and income distribution data. This research note should be read with Research Note 41 and Research Note 42 that considers the economic impact and health effects of a sugar tax in detail.