Impact of imposing health taxes and warning labels
A health tax of between 20% to 30% in addition to GST can be considered to be imposed on sugar, sugar sweetened beverages (SSBs) like colas and juices as well asfoods high in sugar, salt and fat(HFSS).
The recommendation is an outcome of a UNICEF-funded project, and the authors hope that this study along with others will. influence policies aimed to reduce consumption of sugar and related products.
Niti Aayog is interested in understanding the impact of imposing health taxes and warning labels on food products.
This is to encouraging healthy eating practices in Indian consumers.
Health economists and WHO and a co-author of the study tells, Its does not recommend taxing households on purchase of their regular ration of sugar.
The study insists that bulk consumers of sugar such as confectionery and sweet manufacturers may be taxed which may reduce their demand for sugar.
According to Ministry of Consumer Affairs, Food and Public Distribution data, confectionery manufacturers purchase up to 55% of annual sugar produced in India.
What is Price Elasticity
Price elasticity of demand refers to the responsiveness of the quantity demanded of a good or service to changes in its price.
It essentially measures how much demand shifts when the price goes up or down.
It's expressed as a coefficient, a number that tells you how much the percentage change in quantity demanded is in relation to a one percent change in price.
Perfectly elastic: This means a small change in price leads to a dramatic change in demand.
Elastic: Here, a moderate change in price leads to a significant change in demand.
Unit elastic: In this case, the percentage change in quantity demanded is exactly equal to the percentage change in price.
Inelastic: Here, a change in price doesn't significantly impact demand. Insulin or life-saving medication are examples;
Perfectly inelastic: This implies demand does not change at all, no matter how much the price goes up. Elasticity coefficient equals 0.
Understanding price elasticity helps businesses set optimal prices, forecast demand, and make informed decisions about marketing.
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