ASSESSMENT BRIEF “As of August 2019, 50 jurisdictions levied taxes on soft drink

ASSESSMENT BRIEF
“As of August 2019, 50 jurisdictions levied taxes on soft drinks, many of which have been implemented in the past couple of years… The majority of taxes on soft drinks apply to drinks containing added sugar. Such taxes aim to reduce sugar consumption by increasing the price of sugary drinks, which is likely to lead to a reduction in purchases and a commensurate reduction in consumption. A tax may also lead to reductions in sugar consumption through other channels; for example, due to product reformulation to lower sugar content, or by conveying information about the health costs of sugar consumption. The strength of these effects depends on how the tax is structured, as well as how people and firms respond to the tax.”
Griffith et al. (2019), The evidence on the effects of soft drinks taxes, IFS
In the UK, a soft drinks tax for sugar sweetened beverages (SSBs) was introduced in 2018. For drinks containing 5g or more sugar per litre, the rate is 18p tax per litre sold; for drinks containing 8g or more sugar per 100ml, the tax is 24p per litre sold. The tax is paid by the manufacturer. Other countries such as Italy are planning to introduce similar taxes.
Task: Assume you are working for a country which has not imposed a soft drinks levy before. Write a short policy report to inform government policymakers about how firms producing SSBs may respond to the introduction of a soft drinks levy, focusing in particular on the effects of the tax on price and sales. For your baseline answer, assume that firms are unable to reformulate their products to reduce sugar content. Additionally, discuss how your analysis would differ if companies had the option to substitute sugar with alternative sweeteners.
Your report must not exceed 1500 words in total and it must comply with the further guidance on content and structure below.
Requirements: Mentioned