Soda Tax Case Study
Vt. House panel advances penny-an-ounce soda tax
MONTPELIER, Vt. (AP) — A Vermont House committee voted Wednesday to advance legislation calling for a penny-an-ounce tax on sugar-sweetened beverages.
The House Health Care Committee voted 7-2, with two members absent, for the tax bill that would raise an estimated $27 million to support state health programs. Supporters say it will also discourage consumption of products that are big contributors to obesity.
"We have an obesity epidemic and the scientific data is clear that sugar-sweetened beverages have a unique place in contributing to this epidemic," said Rep. George Till, D-Jericho, a doctor and member of the Health Care Committee.
He said reliable studies have shown the tax would …show more content…
by supporting state health programs.
Those opposing the tax argue that the tax burden will be levied upon distributers which will see them distributing the extra cost of production across all their products, negating the very purpose of the tax and additionally cause consumer to seek lower prices in different states.
Price elasticity of demand (PED) is a measure of the change in demand for a good as price changes. SSB has a very high PED. This sees the demand for SSB being more responsive to price than the supply of SSB. Consequently the demand curve is more sloped than the supply curve.
Figure 3 shows how PED determine who hold more tax burden. The demand curve is very negatively sloped while Supply moderately positively sloped. The tax shifts the supply curve upward by the amount of the tax to S1 + tax where Q1 is supplied at P1 price. The market is in a state of equilibrium where Q* is supplies at P* price. The government receives CYP1X revenue where a major CYP*Z is burdened upon the producer and a minor P*ZP1X burdened upon the consumer.
Figure
MONTPELIER, Vt. (AP) — A Vermont House committee voted Wednesday to advance legislation calling for a penny-an-ounce tax on sugar-sweetened beverages.
The House Health Care Committee voted 7-2, with two members absent, for the tax bill that would raise an estimated $27 million to support state health programs. Supporters say it will also discourage consumption of products that are big contributors to obesity.
"We have an obesity epidemic and the scientific data is clear that sugar-sweetened beverages have a unique place in contributing to this epidemic," said Rep. George Till, D-Jericho, a doctor and member of the Health Care Committee.
He said reliable studies have shown the tax would …show more content…
by supporting state health programs.
Those opposing the tax argue that the tax burden will be levied upon distributers which will see them distributing the extra cost of production across all their products, negating the very purpose of the tax and additionally cause consumer to seek lower prices in different states.
Price elasticity of demand (PED) is a measure of the change in demand for a good as price changes. SSB has a very high PED. This sees the demand for SSB being more responsive to price than the supply of SSB. Consequently the demand curve is more sloped than the supply curve.
Figure 3 shows how PED determine who hold more tax burden. The demand curve is very negatively sloped while Supply moderately positively sloped. The tax shifts the supply curve upward by the amount of the tax to S1 + tax where Q1 is supplied at P1 price. The market is in a state of equilibrium where Q* is supplies at P* price. The government receives CYP1X revenue where a major CYP*Z is burdened upon the producer and a minor P*ZP1X burdened upon the consumer.
Figure