Impact of a sugar-sweetened beverage tax on sugar producers in Ukraine

Abstract

Taxes on sugar-sweetened beverages can promote health and raise revenue. Whether these taxes negatively impact domestic sugar producers, an argument often made by opponents, is understudied. We extended a simulation model based on a uniform specific volume-based tax of UAH 4/L in Ukraine. We estimated best- and worst-case scenarios for reductions in domestic sugar demand to be 162 and 23 000 metric tons. This is at worst ∼0.5% of current exports, meaning decreases in domestic demand could easily be absorbed by export markets given export trends. Due to highly protectionist sugar sector policy, sugar producers would not be able to fully substitute domestic sales revenues through increased export revenues, but the worst-case revenue gap was <0.5% of total sectoral output in recent years. Overall, introducing a tax on sugar-sweetened beverages in Ukraine is likely to have a very limited impact on domestic sugar producers.