Don’t taxes reduce consumption?

Studies have shown that taxation can have the effect of reducing consumption in some product categories. However, it is also observed that those people who consume the most are likely to be the most resistant to price rises. Hence the people who perhaps should be encouraged to consume a certain food or drink more moderately are the very ones who continue to consume them despite the tax.

In addition, in the soft drinks category, even if people do stop purchasing products because of tax, they are likely to switch to other drinks and hence their actual calorie reduction is minimal.