Question

The Australian Medical Association has proposed a national tax on sugar. A consumer advocacy group “Choice & Protection” is considering the position it should take on the tax proposal, and has commissioned you to prepare a report. Your terms of reference are:

“Provide a brief background on the rationale for the tax proposal and assess likely implications of a tax on sugar, including on:

Sugar consumption;

Consumer wellbeing (utility);

Potential impacts for different income groups;

Sugar production and the production and price of goods for which sugar is an input.

Based on the assessment, provide a recommendation on whether Choice & Protection should support or oppose the tax proposal.”

Please provide detailed ideas for each bullet point and principles of microeconomics that can be applied in the question.

Answer 1