Who pays and Who benefits? A distributional health-economic evaluation of strengthening the UK soft drinks industry levy

What is it about?

The study evaluates whether strengthening the UK's soft drinks industry levy is socially fair by comparing its financial costs against health benefits across different socioeconomic groups. It concludes that while the tax is financially regressive for lower-income households, it is progressive in health terms because disadvantaged communities experience disproportionately greater health gains.

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Why is it important?

With the UK set to strengthen the Soft Drinks Industry Levy from January 2028, this paper asks who pays for the reform and who benefits from it. It confirms the levy is financially regressive, since poorer households spend a larger share of their income on it. But the health gains fall even more heavily on those same households, because they drink more sugary drinks and cut back more when prices rise. Among working-age adults, the most deprived group gains 8.7 times the QALYs of the least deprived, while bearing only 3.9 times the burden. Stronger levy designs also deliver positive net benefits. In short, the tax is regressive in who pays but progressive in health, and the paper gives policymakers a way to weigh both when judging fairness.