Tax design in the alcohol market

Document type
Working Paper
Griffith, Rachel; O'Connell, Martin; Smith, Kate
Institute for Fiscal Studies
Date of publication
11 December 2017
IFS Working Paper; W17/28
Social Policy, Poverty Alleviation Welfare Benefits and Financial Inclusion
Social welfare
Material type

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This working paper studies optimal corrective taxation in the alcohol market.

This problem is studied in an optimal tax framework and empirically for the UK alcohol market. Welfare gains from optimally varying rates are higher the more concentrated externalities are amongst heavy drinkers. A sufficient statistics approach is informative about the direction of reform, but not about optimal rates when externalities are highly concentrated.

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