v10i4 Wiredu

Using five years post-tax data on CPI prices, national employment as well as firm-level employment, we provide novel evidence on the medium-term effects of the UK Soft Drinks Industry Levy (SDIL). Applying a difference-in-differences research design, we find that neither consumers nor employees visibly bore the costs of the tax. However, given the falling trend in beverage prices in the UK, consumers faced a 6% less decline in soft drink prices compared to prices of levy-exempt beverages, since the introduction of the tax. Employees in the soft drink manufacturing industry were unaffected by the tax, whilst employees in the beverage manufacturing industry even benefitted from it through significant employment increases. Our study offers policy advice for other countries which are yet to implement soft drink taxes. We advocate the implementation of tiered tax designs, such as in the UK, due to its positive impact on employment and minimal burden for consumers.