Policy of Tax Imposition on Sugary Drinks in Australia

Running head: ECONOMICS FOR BUSINESS
Economics for Business
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ECONOMICS FOR BUSINESS1
Executive Summary
This report aims to discuss the policy of tax imposition is Australia. Many countries
implemented the policy of tax imposition, but Australia did not, due to various reasons
discussed in the report. The issue of taxing sugary drinks has been discussed, and the causes
that are prohibiting Australia from taking measures to impose tax are mentioned. The
stakeholders of the sugary drink market have been identified, and their stakes were discussed.
The economics of the market and policy have been discussed in the report. Also, alternate
solutions to the problem were given in the report. The report concluded that sugary drink
consumption should be reduced in Australia to deal with the obesity problem of the country.
Thus, to address the problem, recommendations have been made in the report.

ECONOMICS FOR BUSINESS2
Table of Contents
1.0 Introduction..........................................................................................................................3
2.0 Main Issue............................................................................................................................3
2.1 Causes..............................................................................................................................4
3.0 Stakeholders.........................................................................................................................4
3.1 Stakeholder 1: Consumers................................................................................................5
3.2 Stakeholder 2: Firm Owners............................................................................................5
3.5 Stakeholder 3: Government..............................................................................................5
4.0 Economic Concepts..............................................................................................................6
4.1 Demand and Supply.........................................................................................................6
4.2 Price Elasticity of Demand...............................................................................................6
4.3 Tax and market distortion................................................................................................7
5.0 Alternate Solutions...............................................................................................................8
5.1 Awareness Programmes...................................................................................................9
5.2 Innovation in Sugary Drinks............................................................................................9
5.3 Consumption of Healthy Drinks......................................................................................9
6.0 Conclusion and Recommendations......................................................................................9
7.0 Reference List....................................................................................................................11

ECONOMICS FOR BUSINESS3
1.0 Introduction
The world is growing fast economically, and the disposable income is simultaneously
growing and leading to more consumption in every respect. Consequently, the consumption
of sugary drinks has increased by many folds. Whenever people feel tired of thirsty, they tend
to consume sugary drinks to refuel or to quench thirst. It is scientifically proven that
consuming sugary drinks aggravates the chances of becoming obese. Both evidence and
research have shown that the top obese countries in the world consume more sugars (Basu et
al., 2013). Obesity gives rise to various chronic diseases. Hence, considering the health
issues, many countries have already imposed a tax on sugary drinks to discourage
consumption. This report discusses the effect of sugar tax from the stakeholders’ viewpoint
based on a selected case in Australia The discussion mainly focuses on why or why not
Australia is imposing a tax on sugary drinks and the possible outcomes of the available
decisions. The economic concepts of taxation on sugary drinks are discussed, along with
possible and more feasible solutions. The report recommends policy solutions, that could help
all the stakeholders and guide them to avoid welfare loss in case of any of the stakeholders of
the industry. Thus, studying the case of Australia regarding tax imposition on sugary drinks
leads to the big picture of Australian sugary drinks industry and the necessity of sugary
drinks tax.
2.0 Main Issue
The concerned case of a tax on sugary drinks discusses the importance of tax on sugary
drinks to discourage consumption and avoid the increasing harmful health trend of obesity
(Han & Powell 2013). Perceiving the health threat, countries like the United States, Ireland,
Saudi Arabia, South Africa and other twenty-six countries have already imposed a tax on
sugary drinks. Thus, the positive relation between sugary drinks and obesity is attracting the