The assessment task for this component requires you to write a short-term paper (1500 words) You must answer the question set out below.
Some commentators have argued that taxes on unhealthy foods or food components (such as sugar, fat and salt) should be imposed. What arguments are there for such a tax (or set of taxes)? What will determine if they will be effective in achieving the desired outcome? Do you see any problems associated with such taxes in terms of who actually pays them? Is there any empirical evidence that such taxes are effective? What alternative policies might achieve the desired outcome?
In your answer you may wish to focus on one particular type of tax (such as a sugar tax, a fat tax or a salt tax).
For all parts, clearly state all your assumptions and use well labelled diagrams to illustrate your discussion. Discussions not using appropriate economic models/theories will earn low marks. Research: You are expected to do some research for this essay/ term paper. This research should help inform your discussion of exactly why such taxes have been proposed; how such taxes might work, what determines the effectiveness of such taxes and the empirical evidence around such taxes.
Two references which may be useful starting points are the following:
Leicester, A. and F. Windmeijer (2004), "The'fat tax': economic incentives to reduce obesity", The Institute for Fiscal Studies, Briefing Note No. 49.
Anonymous (2016), "Sugar Taxes: A Briefing", Institute of Economic Affairs, London.