The sugar tax

Question 1

Reasons for government intervention

Answer 1

1. to stabilise the economy
2. to reallocate resources
3. to distribute income

Question 2

Why government intervention on undesirable products?

Answer 2

The government doesn’t want these goods to be produced in the quantities that they are, or at all.

Question 3

Government intervention strategies - excise tax

Answer 3

An indirect tax imposed on selected unfavourable goods and services. Is paid to the government by producers but is passed on to the consumer as part of the price of the good/service.

Question 4

Stakeholder

Answer 4

A group or individual who has a vested interest in, or is affected by the activities of a business.

Question 5

Federal government

Answer 5

• Against
• Don’t want to be responsible for raising the price.
• Believe individual’s should take their own responsibility.

Question 6

Beverage industry

Answer 6

• Against
• Will make their sales drop.

Question 7

AMA (australian medical association)

Answer 7

• For
• Believe that sugary beverages have no nutritional value.
• Like the effects of the past excise tax on tobacco products.

Question 8

Alternative courses of action - sugar tax

Answer 8

• Make water default drink in meal packages.
• Invest in educating younger people on the topic.
• Individual’s taking own responsibiltiy.
• Make healthy hydration options more appealing and visible in stores.

Question 9

Unintended consequences - definiton

Answer 9

Outcomes that are not ones foreseen or intended by an action or decision. Can be positive or negative

Question 10

Unintended consequences - sugar tax

Answer 10

• Stockpiling
• Bulk buying
• Increase in theft
• Job losses (beverage industry + sugar can production).
• Disadvantaged groups spending more money on this and less on actual necessities.
• Adults choosing cheaper alternatives in social situations (alcohol) which can have other consequences.
• People drinking more tap water > using reusable water bottles > less plastic waste.

Question 11

Cost benefit analysis - cost

Answer 11

• Erosion of personal accountability.
• Quick fix not solving root of problem.
• Targeting + affecting sales of businesses.
• Takes away choice of diet.
• Makes food more expensive.
• Job losses.
• Unfair on low income groups.
• Little evidence it actually works.

Question 12

Cost benefit analysis - benefit

Answer 12

• Provides incentive for improvement.
• Leads to lower taxes.
• Encourages producers to make healthier products.
• Reduce risk of diseases (tooth decay, diabetes) which gives healthcare system a break.
• Prevents heart attacks + strokes.
• Helps fix major social challenge of obesity.

Question 13

Sugar tax effect on equilibrium price

Answer 13

Will decrease because of excise tax.