Document Type

Working Paper

Publication Date

2011

Abstract

This paper reviews the practice of levying an excise tax on soft drinks in sub-saharan African countries, and evaluates this practice against theoretical norms for levying an excise tax. The question is whether such taxes are justified or whether they are discriminatory and impose a welfare cost on the country. The paper concludes that the sin tax justification does not hold for soft drinks, nor do income distribution justifications. Arguably the best reason for such a levy is revenue, but this argument is weakened by a higher price elasticity of demand than usually supposed.

Comments

International Center for Public Policy Working Paper Series #1106, Andrew Young School of Policy Studies, Georgia State University

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