The U.K. government has decided to impose a tax on sugary beverages, which has caused many problems for soft drink companies. The tax will be issued to the producers of beverages that contain more than 5 grams of sugar per 100ml and will start in 2018. U.K. finance minister, George Osborne, expects the tax to raise 520 million euros in the first year. On the other hand, some of the producers are arguing that they are the only food and drink product to have made any progress at reducing their sugar content over the years and should not be punished for it. Many soft drink companies are disappointed by this decision and are planning to take legal action.
http://www.cnbc.com/2016/03/21/
I am interested to see how this turns out for the soft drink companies. If the tax was put in place it seems that the tax would go directly to consumers through increased prices instead of being placed on the producers. This would likely decrease demand for the sugary beverages, but producer surplus would likely not be largely affected since most people would not stop drinking soft drinks.
ReplyDeleteI am also interested to see what happens. While I agree that soft drink companies have attempted to lower their sugar content, they still are selling a product that can provide many health issues, especially among children. To me, this seems like a win-win situation. It makes it costly to drink unhealthy beverages, and generates tax revenue.
ReplyDeleteTo be honest, I think that this is unfair for the soft drink companies. I think that many companies have already reduced the sugar content in their drinks over the years. For example, Coke offers Coke Zero, which has 0 zero sugar. Therefore, it is the decision of the consumer to decide what product to buy. I think if a company offers an alternative beverage that has less sugar, they should not be punished because the demand is for the products with higher sugar content. If health is the concern, then they should tax consumers because they chose to purchase something that is worse for them. As a result, sales on these beverages would decrease due to less demand and this would give an incentive to producers to find ways to reduce the sugar levels.
ReplyDeleteI believe this will force companies who produce these beverages to find alternative sweeteners for their products. I also agree with David's point regarding a tax for the consumers because they are making a personal choice to consume something that they know could be detrimental to ones health.
ReplyDeleteWe could probably use something like this in the US! Unbelievable the size of soft drinks and other drinks that people purchase. However, I'm not sure if the companies should be punished for this or not. I am not sure if there is another may to do this so companies aren't hurt, but consumers drink less. Maybe an increase in soft drink prices which will reduce demand, and some sort of subsidy given to the soft drink companies from the government.
ReplyDeleteI think it will open new markets for drinks and make the soda companies diversify their product
ReplyDeleteIt is interesting to look at "sin taxes." They are put in place to discourage people from purchasing something that is considered as unhealthy. However, these taxes hurt businesses which in turn could hurt the overall economy.
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