Taxes & Deadweight Loss
The UK introduced a sugar tax with two tiers in 2018. The point was not to collect tax. It was to make sure no one paid it.
In April 2018, the UK introduced a tax on sugary soft drinks. The structure had two tiers, drinks with five to eight grams of sugar per 100 millilitres, paid 18 pence per litre, drinks above 8 grams paid 24 pence. He wanted manufacturers to reformulate their products so they fell below the threshold and avoided the tax altogether. Coca-Cola refused. The classic recipe with 10.6 grams of sugar per 100 millilitres stayed exactly as it was. And the company let consumers pay the higher tier price. Almost everyone else moved. Fanta cut its sugar content. Even earn brew, the famously sweet Scottish soft drink, changed its recipe of more than 100 years for the first time. Some reformulations triggered consumer petitions, but every brand that moved escaped the levy.
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