Effect of the sugar tax on confectionery prices and consumption

Other Publications, Reports 38 Tuomas Kosonen, Riikka Savolainen

The confectionery tax was introduced at the beginning of 2011 on sweets and ice cream. The official justification was to raise tax revenue, but in political discussion a clear objective was also to steer consumption toward healthier choices. The confectionery tax clearly increased retail prices of sweets, but it did not affect demand for confectionery.

In contrast, when the soft drink tax was increased in 2014 for sugar-sweetened beverages while sugar-free drinks remained at a lower tax rate, consumption of sugary drinks declined and demand shifted toward sugar-free alternatives. Successful steering toward healthier products therefore appears to require the existence of a sufficiently close substitute within a healthier product category. (AI translation)

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