Excise taxation of products harmful to health in the context of the implementation of the national development goals of the Russian Federation

Musaeva Khaibat Magomedtagirovna ORCID: 0000-0002-3071-0842 PhD in Economics Associate Professor of Taxes and Tax Administration Department, Taxes, Audit and Business Analysis Faculty, Financial University under the Government of the Russian Federation 125468, Russia, Moscow, Leningradsky Prospekt str., 49 zavazatm17@gmail.com

Introduction. Problem statement

  Starting from the period of 2020, the world economy is actually developing in the era of global financial instability. "The post-crisis period showed that the Russian economy as a whole, and its tax system in particular, turned out to be better prepared for global exogenous shocks than many other countries. The tax system of the Russian Federation can serve as a model for other countries of the world, including developed ones, thanks to the successful introduction of new digital administration technologies" ^[1].At the same time, emerging new challenges require further research into the possibilities of realizing the fiscal and regulatory potential of taxes. 

  In the Decree of the President of the Russian Federation dated 21.07.2021 No. 474 "On the national development goals of the Russian Federation for the period up to 2030", "preservation of the population, health and well-being of people" is designated as one of the key national development goals of the country, it is assumed to ensure sustainable population growth, increase the average life expectancy of the population from the current 72.8 years up to 78 years old."^[1]The potential of the taxation system plays a significant role in achieving this goal.

 Numerous studies conducted by both foreign and Russian authors show that excessive consumption of alcohol-containing and alcoholic beverages is one of the main causes of adverse consequences for the health and behavior of people around the world. The consumption of alcoholic beverages in greater quantities increases the risks of cancer, increases the number of deaths  from cardiovascular diseases and cirrhosis of the liver; leads to an increase in crimes, especially of a domestic nature. The exceptional importance of solving the problem of excessive consumption of products harmful to health necessitates a systematic approach, the search for additional tools to influence individual behavior, including through tax measures.

   A set of government decisions aimed at curbing the consumption of products harmful to health can be classified into various measures. In particular, on: "informational and educational; budgetary restrictions of the consumer through direct administrative prohibitions or restrictions; budgetary restrictions of the consumer due to changes in the prices of goods, through indirect taxation" ^[4]. Excise taxation occupies an important place in the system of these measures aimed at curbing the consumption of products harmful to health.

   Since 1.07.2023, in Russian practice, the list of excisable products has expanded by including drinks with an excessive sugar content in their composition. The main purpose of such a tax is to improve the health of the population by reducing the consumption of sugar-containing beverages, since drinks containing large amounts of sugar are harmful to human health. Excise taxes will be levied on soft drinks with added sugar and other sweeteners, the content of which exceeds 5 grams per 100 ml of the drink. It is supposed to establish an ad valorem rate in the amount of 7 rubles. from the retail price of a unit of product for these drinks. Excisable goods also include beverages made with the use of drinking or mineral water, with a volume fraction of ethyl alcohol not exceeding 0.5%.  

     Initially, it was assumed that excise taxes on sugary carbonated drinks would be put into effect from 1.01.2023. Subsequently, this deadline was postponed to 1.07.2023, by adjusting the list of drinks subject to excise taxes. Excluded from the original list are: natural juices, nectars, fruit drinks, syrups, milk, dairy products, jelly and plant-based beverages made from cereals, legumes, oilseeds, nuts, coconut, with the exception of tonic drinks. In addition, the composition of sweetening substances contained in beverages planned to be subject to excise duties has been clarified. Along with sugar, they include glucose, fructose, sucrose, dextrose, maltose, lactose, syrup with sugar, honey.  From 1.07.2023, the zero excise tax rate on beer with a strength of up to 0.5% is applied only if the beer does not contain sugar-containing elements as a component. The amount of carbohydrates in the nutritional value of such beer should also not exceed 5 g. per 100 ml of the drink. According to the forecast estimates of the Government of the Russian Federation, due to the implementation of this measure, annual additional revenues from excise taxes in the amount of 35 billion rubles are expected to the federal budget.

   Specialists of the Ministry of Health of Russia believe that the imposition of excise taxes on sugary drinks will mitigate the problem of excessive consumption of sugar by Russians, which will subsequently reduce the number of diabetic patients, and this in the future will help to increase the life expectancy of the population, which is, as noted above, one of the national development goals of the Russian Federation. Sweet carbonated drinks have no nutritional value, are a source of excessive sugar addition to the diet ^[12], have a low level of saturation of the human body, which leads to overweight and an increase in the number of concomitant diseases. Thus, the introduction of excise taxes on products with excessive sugar content, at first glance, is quite justified.

 However, in the conditions of the Russian Federation, given the novelty of the adoption of a legislative decision to expand the list of excisable goods by including beverages with excessive sugar content, this measure requires a deeper study. At the same time, research is required, not only possible positive effects, but also negative sides, including on the basis of studying the practice of introducing similar taxes in foreign countries.

Analysis of the impact of excise rates on the structure of household consumer spending

   At the present stage, excise taxes in the consolidated budget of the Russian Federation, despite some fluctuations caused by changes in the macroeconomic situation in the country, as well as the list of excisable goods and the rates applied to them, continue to be significant revenue sources, providing over 5% (Table. 1), all tax revenues administered by the Federal Tax Service of Russia.

  In domestic practice, in its development, the mechanism of calculating and collecting excise taxes has constantly changed not only in the historical aspect, and in the initial period of transition to market relations, but in the conditions of the introduction of the Tax Code of the Russian Federation. The changes in the list of excisable goods and the applicable tax rates mirror the current structure and role of excisable taxation in the tax system of the Russian Federation. Table data. 2 demonstrate that excise taxes on petroleum products, tobacco products, as well as excise taxes on alcoholic beverages play the main budget-forming role in the structure of receipts for excisable goods. The share of other excisable goods accounts for only a small part of tax revenues and these revenues have a tendency to decrease. As is known, for fiscal purposes, "it is better to use those objects that are massively present in the economy and convenient from the standpoint of obtaining reliable information about them" ^[2].

   In the Russian Federation, since the beginning of the transition to the market and up to the modern period, excise rates have been increasing, "except for alcoholic beverages, cars, motor gasoline, for which in some periods the growth of rates was suspended, which was caused by the need to regulate the ratio between supply and demand for certain types of excisable goods" ^[5].

  Table 1

Dynamics of changes in the fiscal role of excises administered by the Federal Tax Service of Russia in 2015-2020/ Dynamics of changes in the fiscal role of excises administered by the Federal Tax Service of Russia in 2015-2020

Source: compiled by the author according to the reporting data of the Federal Tax Service of Russia (https://www.nalog.gov.ru/rn77/related_activities/statistics_and_analytics /,accessed: 1.04.2023)/Source: compiled by the author based on the reporting data of the Federal Tax Service of Russia (https://www.nalog.gov.ru/rn77/related_activities/statistics_and_analytics /, date of access: 1.04.2023)

    As follows from the data in Table 2, the growth rate of excise tax receipts for tobacco products outstrips the growth of tax provisions for other excisable goods and products. At the same time, if in the period 2016-2018 excise taxes on tobacco products had a steady upward trend, then in 2019. compared to 2018.  tax revenues on them decreased by 12.3%. In 2020, compared to 2019, receipts from excise taxes on tobacco products continued to grow (+51.3%).  

The increase in excise tax receipts for tobacco products is largely due to the increase in excise rates, as well as the expansion of the list of excisable goods classified as "tobacco products". Since 1.01.2017, excisable goods include electronic nicotine delivery systems, liquids for electronic nicotine delivery systems, as well as tobacco (tobacco products) intended for consumption by heating. In 2021, excise tax rates on tobacco products continued to increase and, instead of the 4% increase originally foreseen by the Code, actually increased by 20%.

     In this context, it should be noted that in recent decades in the Russian Federation, anti-smoking measures have been more pronounced and effective, while they are not limited to tax measures. "As a result of the measures taken, the number of smokers in Russia in the period 2009-2019 decreased by 17 million people, and sales of tobacco products decreased by 28.6%" ^[3]. However, despite the positive results of the measures taken to protect health, the country continues to be among the top 10 "smoking" countries in the world.

     Revenue receipts to the budget system of the Russian Federation for excise taxes on the group of alcoholic and alcohol-containing products are not growing as steadily as for tobacco products. At the same time, the rates of growth of rates on beer, cider, poiret and honey outstrip the rate of growth of rates on spirits. So, in 2023 compared to 2015. excise tax rates on alcoholic beverages with a strength of over 9% increased by 1.2 times, on wines and champagnes by 1.8 times, and on beer with a volume fraction of ethyl alcohol of over 8.6% by more than 2.6 times, on cider, poire and mead by 2.8 times (Table 3). 

       Table 2

     Volume and structure of excise receipts by types of taxable products in the Russian Federation/The volume and structure of excise revenues by types of taxable products in the Russian Federation

Source: compiled by the author according to the reporting data of the Federal Tax Service of Russia (https://www.nalog.gov.ru/rn77/related_activities/statistics_and_analytics /, accessed: 1.04.2023)/Source: compiled by the author based on the reporting data of the Federal Tax Service of Russia (https://www.nalog.gov.ru/rn77/related_activities/statistics_and_analytics /, date of access: 1.04.2023)

   In general, despite the increase in excise rates on alcoholic beverages and beer, there are no profound changes in the structure of household consumer spending (Table 4). At the same time, it cannot be argued that there is a complete absence of such a connection. Thus, in 2016, in the structure of household consumer spending, the share of spending on alcoholic beverages accounted for 1.7% of all costs. In the period 2017-2019, in order to maintain the alcohol industry, excise rates on strong alcoholic beverages were frozen (Table 3). At the same time, in 2017, the share of household expenditures on alcoholic beverages amounted to 1.6% of all expenditures and remained virtually unchanged in 2018 and 2019. In 2020. excise tax rates on alcoholic beverages, as well as beer, with a volume fraction of ethyl alcohol over 8.6% were indexed upward (Table 2). Despite the increase in excise tax rates on beverages harmful to health, in 2020 compared to 2019, at a rate exceeding the volume of inflation, the share of household consumer spending on alcoholic beverages increased by only 0.2% percentage points (Table 4).

    Data on changes in the cost structure of household consumer spending (Table.4) they confirm the impact of changes in excise rates on the preferences of citizens regarding the use of products harmful to health, but the regulatory effect of excise taxation, especially alcoholic beverages, continues to be insignificant. In order to achieve a greater effect of excise taxation of products harmful to health, further adjustment of tax legislation is necessary, as well as the implementation of systemic measures to promote a healthy lifestyle.

Table 3 

Trends in changes in excise rates on alcoholic beverages in the Russian Federation (rubles, per 1 liter of alcohol contained in the product)  in 2015-2023/Trend of changes in excess rates for alcoholic products in the Russian Federation (rubles, per 1 liter of alcohol contained in the product) in 2015-2023

Source: compiled by the author according to the Tax Code of the Russian Federation (http://www.consultant.ru/document/cons_doc_LAW_19671 /, accessed: 12.03.2023)/Source: compiled by the author according to the Tax Code of the Russian Federation (http://www.consultant.ru/document/cons_doc_LAW_19671 /,date of access: 12.03.2023)

    The paper demonstrates that reducing the availability of products is a means of reducing the consumption of products, and in our case, harmful to the health of alcoholic beverages, affecting the quality and life expectancy of the population. Through the tax mechanism, the state can influence the prices of alcoholic beverages, and higher prices for them, other things being equal, lead to a decrease in the level of their consumption. However, in the conditions of the Russian Federation, the potential of excise taxation in regulating the containment of consumption of products harmful to health is not fully used. In the period 2009-2014, the price availability of alcoholic and alcohol-containing products decreased (as a result of an increase in minimum prices and an increase in excise duty). However, in 2015-2019, there was an increase in the availability of alcoholic beverages as a result of an unbalanced pricing policy. In 2015-2016, the excise tax rate on alcoholic beverages with a strength of over 9% was frozen at 500 rubles, and in 2017 the price was increased by only 4.6% to 523 rubles, and then it was frozen again until the end of 2019. In the period 2020-2023, excise tax rates on alcoholic beverages begin to grow, but at a much lower rate than it was in the period 2009-2014. In 2018, one gram of alcohol in beer cost 1.5 times more than in vodka, which did not contribute to the replacement of strong alcoholic beverages with drinks with a low alcohol content.

Table 4

Trends in the structure of household consumer spending for 2015-2020 (%) /Trends in the structure of household consumer spending for 2015-2020 (%)

  Source: compiled by the author according to Rosstat (https://rosstat.gov.ru/folder/210/document/13212 , accessed: 03/27/2023)/Source: compiled by the author according to Federal State Statistics Service (https://rosstat.gov.ru/folder/210/document/13212 , date of access: 03/27/2023)

     Along with excise rates, the size of the minimum retail price affects the formation of the price of alcoholic beverages. Since 1.01. 2023 in Russia there has been an increase in minimum retail prices (MRC) for alcoholic beverages, strength above 28%. The MRC for spirits increased as follows: "for vodka - by 7.7%; for brandy - by 7.8%; for cognac - by 7.7% for a bottle of 0.5 liters.^[2] The cost of minimum retail prices for sparkling wines increased by 40.1% (from 169 to 239 rubles for 0.75 liters). In the Russian Federation, minimum retail prices for beer, as well as for wines (with the exception of sparkling wines) are not set. VOS recommends setting minimum prices for all alcoholic and alcohol-containing products, including wine and beer.

Foreign practice of excise regulation of consumption of alcohol-containing and alcoholic products

     Alcohol is a psychoactive substance and a strong carcinogen that causes significant harm to drinkers, their families, society and the economy as a whole. Nevertheless, the mechanisms of state regulation (primarily monetary tax measures) in curbing the consumption of alcoholic beverages are used in practice to a much lesser extent compared to tobacco products.  For example, the World Health Organization (WHO) recommends that the share of excise taxes on tobacco products should be at least 75% of the retail price of the most popular brand of cigarettes, and this recommendation is followed by most states of the European continent.^[3]

  The regulatory potential of excise taxes in terms of curbing the use of alcohol-containing and alcoholic beverages harmful to health is not fully used, not only in Russia, but also in many foreign countries. Despite the fact that the imposition of high rates of excise taxes on alcoholic beverages is one of the ways to reduce their consumption, many European countries do not dare to set high rates on alcoholic beverages. Foreign scientists M. Neufeld, P. Rovira, C. Ferreira-Borges ^[16] conducted studies of excise taxation of alcoholic beverages in the countries of the European region, including the European Union (EU) and the countries of individual countries of the Commonwealth of Independent States (CIS). At the same time, an estimate was given of how many lives could be saved each year if European countries established a minimum level of the share of excise tax in retail prices for all alcoholic beverages, in the amounts recommended by WHO. The results of their research showed that in just one year in the European region it would be possible to save 40033 lives if the minimum share of excise duty in the price of alcoholic beverages was set at 25%. For strong alcoholic beverages, an excise tax rate of at least 70% of the cost is optimal.  ^[16].

    There are no minimum excise rates per liter of finished products for natural wines in the EU countries, and in 15 countries excise taxes on wine are not levied at all.  At the same time, special taxation rates apply for alcoholic alcoholic beverages, which imply an increase in  excise tax rates as the strength of the alcoholic beverage increases. In the countries of the European continent (including the CIS countries), the highest level of alcohol consumption and the highest proportion of deaths from all causes caused by alcohol. At the same time, the volume of alcohol consumption, the frequency of alcohol consumption in large quantities, the proportion of mortality, morbidity and disability vary significantly in different countries. The countries of Eastern Europe, especially the Eastern European countries of the former Soviet Union, experience significantly more harm due to alcohol consumption than the countries of Western Europe  Europe.

   An analysis of the foreign practice of excise taxation in the OECD countries shows that the share of excise duties for the period 2011-2019.  It increased in the Scandinavian countries, in the Czech Republic and in Ireland. At the same time, it decreased in Austria, Germany, Slovakia and the USA. In other countries, the percentage of excise duties remained unchanged. In none of the OECD countries did excise taxes account for more than 70% of beer and wine prices ^[15]. Only in Sweden excise taxes accounted for 76% of the minimum price of liquor ^[17].

      Of all the OECD foreign countries, the most successful measures to curb the consumption of alcoholic beverages, especially the containment of the consumption of strong alcoholic beverages, are being implemented in the Scandinavian countries. "In these countries, there has been a tendency for a long period of time to increase excise taxes on strong alcoholic beverages and at the same time lower rates on beer and wine" ^[7]. State monetary measures are aimed at changing the preferences of the population, in order to replace the consumption of strong alcoholic beverages with drinks with a lower alcohol content, causing less harm to human health. Countries such as "Norway, Denmark, Sweden and Finland, thanks to the implementation of a whole range of alcohol policy measures (including in terms of improving excise rates), have moved from countries that consume strong alcoholic beverages to states that consume weak alcoholic beverages"^[7].

    In the conditions of the Russian Federation, according to the author, the main problem of taxation of alcoholic beverages is related to the need to establish balanced excise rates, and not their large-scale growth ^[14]. It is known that excessively high excise rates lead to an increase in the level of illegal production of alcoholic beverages, which poses a danger to its consumers. At the same time, it should be noted that the situation is unacceptable when the rates of growth of rates on alcoholic beverages lag behind the rate of inflation, and when excise rates on cider, poire and mead, wine and beer outstrip the growth of rates on spirits.

     In order for legislative decisions to combat the consumption of products harmful to health to have a positive effect, they must be comprehensive and systematic, and not limited to individual periods. At the present stage of the Russian Federation, taking into account the factor of widespread consumption of alcoholic beverages not only by adults, but also by adolescents, there is a need to make programmatic decisions to achieve a real effect in mitigating the problems of alcoholism, taking into account the study of the best foreign practices.

  Discussion aspects of the expediency of excise regulation of the consumption of beverages with excessive sugar content

   As noted earlier, in the Russian Federation, since 1.07.2023, the list of excisable goods in terms of taxation of products harmful to consumption has expanded due to the inclusion of sugary drinks with excessive sugar content in the list of excisable goods. It is assumed that excise taxes on sugar-containing beverages will be charged at a rate of 7% of the retail price (for comparison, WHO recommends a rate of 20% on similar beverages).

  It is impossible not to note the inconsistency of the state decision on the introduction of excise taxes on sweet carbonated drinks. On the one hand, the Government of the Russian Federation expects an increase in federal budget revenues, and on the other hand, experts believe that as a result of the introduction of excise taxes on sugary carbonated drinks, their consumption will noticeably decrease. In the event that a significant decrease in the consumption of carbonated sugar-containing beverages is expected, it is not clear what kind of increase in tax revenues can be discussed.

     It should be noted that regarding the expediency and effectiveness of the introduction of excise taxes on sugary drinks with excessive sugar content in Russia, the opinions of experts from the very beginning of the proposals for their introduction were ambiguous. Specialists of the Ministry of Agriculture believe that the collection of excise taxes on sugary drinks will lead "to a decrease in the volume of sales of beverages, the profits of manufacturers, will entail a decrease in the attractiveness of the industry for investors, which, in turn, will create a risk to lower production volumes, job cuts and tax deductions."^[4] According to B.Titova the introduction of excise taxes on sweet carbonated drinks will put many enterprises of the industry producing such beverages on the verge of bankruptcy, the reduction of 100 thousand jobs in production will lead to the loss of up to 1 million jobs in related industries.

     In this context, we must not forget that economic growth is linked to the standard of living of society. As a result of the study "analysis of the impact of taxes on economic growth in foreign countries, the consequences of a hypothetical tax reform (the effect of reducing marginal tax rates by 5% and average rates by 2.5% on economic growth) were revealed, in the form of an increase in growth rates by an average of 0.2-0.3%. In the process of modeling the impact of taxes on economic growth at the macro level, it was found that an increase in tax rates by 10% can lead to a decrease in growth rates by 0.5%" ^[8].

   Various studies conducted by foreign and Russian scientists indicate ambiguous estimates of the impact of the level of the tax burden on economic growth, but in general, the general conclusion is that in the long term, excessive growth of the tax burden negatively affects the growth rate of production and investment. A high workload suppresses incentives for entrepreneurial activity, strengthens the shadow component of the economy, reduces the level of competitiveness of products and has high risks of reducing tax revenues to the budget ^[9].

   According to N.I. Malis, the establishment of "excise taxes on sugary carbonated drinks may lead to the replacement of sugar with other ingredients or to a reduction in sugar content to the size required for tax exemption, which is unlikely to make these drinks healthy. At the same time, the volume of output of taxable products will be sharply reduced" ^[6].This point of view is not shared by prof. T.V. Zvereva, who believes that in Russia "the market of sweet carbonated soft drinks is sufficiently stable and the establishment of excise taxes on these drinks will not lead to tangible consequences for this industry" ^[3].

   Some manufacturers of carbonated beverages immediately announced the suspension of investments in new production facilities, due to the upcoming imposition of excise taxes on soft drinks (in particular, the producer of lemonades "Chernogolovka"). A decrease in the volume of investments in the development of the industry under study may eventually absorb the expected fiscal effect  from the expansion of the list of excisable goods, due to a possible decrease in revenues to budgets of different levels from other taxes (VAT, corporate income tax, personal income tax). According to the representatives of Chernogolovka, in the soft drinks market in 2023-2025, the drop in production may amount to 20% of the existing indicators. Consumers can switch to cheaper goods, and therefore a sharp increase in the import of soft drinks from the EAEU countries is not excluded.

     The author believes that even in the absence of an increase in tax revenues to the budget, due to the imposition of excise taxes on beverages with excessive sugar content, it is possible to talk about achieving a socially significant regulatory effect if it is possible to change the preferences and taste habits of the population. The formation of correct eating habits should be considered as the key goal of establishing excise taxes on beverages with excessive sugar content, and not ensuring the growth of tax revenues to the budget.

    In the Russian Federation, retail prices for sugary carbonated drinks after the introduction of excise taxes, according to various estimates of Russian experts, may increase by 7-15% (taking into account inflation and the expansion of the VAT tax base). It is believed that such drinks are consumed mainly by people with low incomes, in this contest, such a tax can be called not only a tax on "harm", but also a tax on "poverty".

    It is important to determine what level of reduction in the consumption of sugar-containing beverages is necessary to make the introduction of excise taxes justified to solve health problems, and whether excise taxes can be made less regressive. In the event that it is not possible to change consumer preferences, additional taxation of sugary drinks will increase the burden on people with low incomes, which is fraught with a subsequent decrease in the quality of food, and cannot and will not have a negative result.

   The results of scientific research on the introduction of excise taxes on beverages with excessive sugar content

      In world practice, the experience of introducing excise taxes on sugary carbonated drinks is not new. The world's first excise tax on sugary carbonated drinks was introduced in Denmark in 1930. Subsequently, in 2013. it was canceled due to the increase in the import of cheap sugary drinks from neighboring countries. Despite the ambiguous effects of the introduction of excise taxes, in foreign countries and in modern conditions, taxes on beverages are increasingly used as measures aimed at reducing the consumption of sugar-containing beverages. How successfully excise taxation achieves its goal largely depends on the extent to which the prices of beverages are rising, i.e. there is a shift in taxes.

     Table 5 shows the results of the main studies of foreign and Russian scientists regarding the feasibility of introducing excise taxes on beverages with excessive sugar content.

       Table 5

 Analysis of research results, the feasibility of introducing excise taxes on sweet soft drinks/ Analysis of research results, introduction of excise taxes on sweet soft drinks

Source: compiled by the author / Source: compiled by the author

    A number of significant studies on the results of the impact of the introduction of excise taxes on sugary carbonated drinks have been conducted in the USA and in the countries of the European Union. Some foreign studies refute the thesis about the inevitable increase in income inequality of the population, as a result of the imposition of excise taxes on sugary carbonated drinks. Thus, scientists A. Chatelan, M. Rouche, C. Kelly, A.Fismen, C. Pedroni, L. Desbouys, K. Castetbon conducted a study of the effect of excise taxes on the daily consumption of carbonated beverages depending on family income among teenagers in European countries such as France, Belgium, Finland and Portugal.  Teenagers, depending on family wealth, were divided into groups with low, medium and high levels of well-being. Before taxation, daily consumption of carbonated beverages was more likely among adolescents from low-income families in France and Belgium (socio-economic inequality) and was the same in all groups in Finland and Portugal, i.e. there is no inequality ^[10]. According to a study conducted by scientists, after the introduction of excise taxes, the daily consumption of carbonated beverages decreased in all groups of adolescents in Finland, Belgium and Portugal. In France, a decrease in the consumption of sugar-containing beverages was observed after the payment of excise taxes only among adolescents from low-income families. Thus, socio-economic models have not changed after the introduction of the tax in 3 out of 4 countries, and socio-economic inequality has decreased in France ^[10].

    Fast food chain restaurants are an environment where the consumption of sugar-containing carbonated beverages is high, and where the impact of excise taxes on price increases and their consumption is least studied. One of the few authors who conducted this study are S. Marinello, A. Pipito, J. Leider, O. Pugach, L. Powell. Scientists have conducted experimental studies of the effect of excise taxes on sugary drinks on changes in the prices of drinks sold in fast food restaurants. In particular, in Oakland, California, where this excise tax was introduced at the rate in 2017. at the rate of 8%.  A group of fast food restaurants was inspected by auditors one month before taxation and 6 and 12 months after the collection of excise taxes. A year after the introduction of excise taxes on sugar-containing beverages in Auckland, an almost complete (82%) transfer of the tax on the prices of diet carbonated bottled water was found in fast food restaurants ^[13].

     The results obtained showed,  that the tax effect on prices is gradual and may be ineffective for curbing the consumption of excisable products in fast food restaurants, since these restaurants do not carry out price differentiation between taxable and non-taxable beverages, and may raise prices for ordinary beverages ^[18]. One explanation for the differences in results under these conditions is that restaurants may specify a single price for carbonated drinks to simplify the menu, while grocery stores usually label and distinguish prices for each product individually. Researchers believe that in order to change the preferences of the population, to really improve the quality of nutrition and reduce the incidence of diabetes mellitus and other concomitant diseases, it is necessary to increase the excise tax rate on sugary carbonated drinks from 8% to 20%, i.e. to the rate recommended by the VOS ^[13].

    According to studies conducted by other foreign authors, the introduction of excise taxes on soft drinks, although it may lead to a moderate reduction in the consumption of soft drinks by children and adolescents in a short period of time, but subsequently this reduction is fully compensated by an increase in the consumption of other high-calorie beverages ^[11].

   Scientists Q. Zhang, J. McCluskey, K. Gallardo conducted a study of the introduction of excise taxes on sugar-containing beverages in 6 US cities at once (Berkeley, Boulder, Colarado, Philadelphia, Oakland, Seattle), as well as in Cook County. Berkeley is the first US city to introduce a sugar tax. In Cook County, the sugar tax was abolished due to low efficiency. The Seattle City Council approved a tax on sugary drinks in the amount of 1.5 cents per ounce from 1.01.2018. The experience of "introducing excise taxes on sugary carbonated drinks in Seattle showed that the cost of the drink increased, but the price also increased for similar drinks, but with a lower sugar content, which were not taxed. The results of the establishment of a tax on sugar-containing beverages in Philadelphia did not confirm the predicted negative economic consequences: an increase in unemployment, a sharp decline in sales ^[19].

   The results of the research conducted by Q.Zhang, J. McCluskey, K. Gallardo indicate that the "sugar tax" on beverages has a transfer coefficient to consumers from 46.8% to 98.4%, depending on geographical location, and the volume of sales of beverages decreases in the range from 5.1 to 14.4%. But the effectiveness of the tax on sugar-containing beverages is undermined by a number of factors. There is an avoidance of cross-border purchases when people make purchases outside the taxable territory. Another factor undermining the effectiveness of the excise tax is the behavioral reaction of consumers. Thus, one drink is replaced by another, in which people switch from excisable to tax-exempt drinks, in some cases, with no less harmful effects on the body ^[15].

  The results of the analysis of the experience of introducing excise taxes in certain US cities, according to experimental data of scientists, indicate that taxes on sugar-containing beverages can be effective ^[19].  However, in order to increase the efficiency of excise taxes, legislative bodies should take into account both the possibility of establishing an optimal tax rate and the possibility of tax evasion. In addition to tax measures, state support is also needed for the implementation of a set of other measures that change the nature of individual preferences of the population (informational, educational and restrictive measures).

Conclusion (conclusions)

1. Discussions continue among Russian economists regarding the impact of pricing policy (including by increasing excise rates and setting minimum selling prices) on curbing the consumption of products harmful to health. At the same time, opinions are contradictory, ranging from high efficiency to complete denial. Most foreign studies generally see a high potential in the excise tax as a means of curbing the consumption of products harmful to health. Own research of statistical data on the change in the structure of consumer spending of the population  The Russian Federation in the period 2015-2020 in response to changes in excise rates on alcoholic beverages and tobacco products indicates the probabilistic presence of such a relationship.   

2. In Russia, the regulatory potential of excise taxation in curbing the consumption of products harmful to health is not fully used. In terms of limiting the consumption of alcoholic beverages and alcohol-containing products, it is characterized by inconsistency and imbalance. In order to achieve a greater effect in curbing the consumption of alcoholic and alcohol-containing products, excise rates, as well as minimum retail prices, should increase as a percentage not lower than the projected inflation rate, and in terms of spirits, exceeding the inflation rate, but not more than 2 times. Despite the fact that many foreign studies confirm the fact of restraining the consumption of alcoholic beverages with a significant increase in prices (the principle of solvency parity applies), it is impossible to allow a sharp rise in prices, bankruptcy of the alcohol-containing industry. The current low rates of excise taxes on alcoholic beverages in many European countries, where most brands of international alcohol producers are located, can make domestic products of the relevant industry uncompetitive. In this context, it is preferable not a sharp increase in excise rates, but a gradual sequential transfer of the tax burden from products with a lower alcohol content to stronger alcoholic beverages (balancing the tax burden).

3. Along with excise taxes, restrictions on the establishment of minimum retail prices have a significant impact on the formation of the price of alcoholic and alcohol-containing products.  In the Russian Federation, minimum retail prices for vodka, cognac, brandy, and sparkling wines are established. It is also advisable to set minimum retail prices for beer and wine. At the same time, the EU should pursue a more active policy among other countries on the mandatory establishment of minimum prices and more intensive excise taxation of alcoholic beverages.

4. The research conducted by the author as a whole indicates rather contradictory assessments of the expediency of introducing excise taxes on sweet carbonated drinks in the conditions of the Russian Federation. The studied experience of foreign countries testifies to both positive and negative effects. Taking into account this circumstance and the fact that the legislative decision on the imposition of excise taxes on sugary drinks in Russia has already been taken, subsequent comprehensive monitoring of the results of their introduction is necessary. At the same time, both in terms of achieving the main goal - reducing the incidence of diabetes mellitus and other related diseases (realizing the regulatory potential of excise taxes in achieving the national development goals of the Russian Federation), and in terms of filling budget revenues (reserves for realizing the fiscal potential of excise taxes).

 5. The most mobile tool of tax regulation is the tax rate. As noted earlier, in Russia it is planned to levy excise taxes on beverages with excessive sugar content at an ad valorem rate of 7% of the retail price of the drink. At the initial stage, it was more expedient to set a fixed rate, as provided for alcoholic beverages and tobacco products. Such rates have already been tested in Russian practice and generally show their effectiveness. The application of fixed excise rates will allow to integrate excise taxes on sugary drinks into the general system of taxation of products harmful to health at a lower cost. The legislation provides for the collection of excise taxes not only on beverages with added sugar, but also sweeteners, which in principle is the right direction for the development of the taxation mechanism for harmful drinks. However, it is advisable to exclude natural sweeteners from the list, for example, honey. In addition, it is important to fix in the legislation the need for constant updating of the list of sweeteners in order to prevent the replacement of sugar with additives that do not contain sugar, but are harmful to human health.

   Taking into account the subsequent practical results of monitoring, it is necessary to adjust the mechanism of excise taxation of sugary drinks in conjunction with the adjustment of the mechanism of levying other taxes, in order to support business, production differentiation, in terms of directing it to change the range of products, switching to the production of beverages that do not harm human health.

6. Measures to increase the tax burden always cause discontent in society to one degree or another. It is important that such measures are supported by society. It also requires constant monitoring of the state of development of the alcohol-containing industry, and the reaction of the population to the measures taken. The increase in rates on strong alcoholic beverages, along with the taxation of beverages with an excessive sugar content, will cause the need for the differentiation of individual industries. In order for this process to take place less painfully, with minimal risk of loss of profits, additional measures of state support are needed.At the same time, they can be either in the form of direct budget investments, or through indirect methods, in particular, exemption from taxation of profits directed to the renewal of production, or a reduction in the corporate income tax rate for the period of diversification of production.

7. As noted in the course of the study, in order for excise taxation measures in the field of curbing the consumption of harmful beverages, both alcoholic and with excessive sugar content, to have an effect, it is important to carry them out in combination and in conjunction with other measures to promote a healthy lifestyle. These solutions should be conceptual, systemic and even programmatic in nature. It is especially important to carry out informational and educational actions among schoolchildren, since the social maturation of personality occurs precisely in adolescence. Measures are also needed to correct already formed preferences among the adult population with the help of special information, including advertising.

    The targeted use of budgetary funds, in particular, the clarity for the population of the specific direction of the use of the funds received is quite an important factor that positively affects the support of the population of the state decisions taken to increase the tax burden. The funds received from the increase in excise rates on strong sleeping drinks, as well as the taxation of sugary drinks with excessive sugar content, will have a lower level of negative reaction from the population if they are directed to specific targeted costs (for example, to help patients with cancer, patients with diabetes mellitus). This approach is already being implemented in Russian practice for personal income tax, when funds from the increase in the base personal income tax rate (from 13% to 15% for persons with incomes over 5 million rubles per year) are sent to a special fund to support seriously ill children. In addition, it is possible to study the issue of full transfer of funds from the collection of excise taxes on products harmful to health to regional budgets, for subsequent referral to health financing (the principle of "service – retaliation" applies). It is no coincidence that the most important principle of taxation recognized in world practice is "the amount of taxes should be in accordance with the amount of services provided by the state" (L. Erhard). This approach to taxation of products harmful to health may provide broader support from the population, measures implemented by the state aimed at achieving one of the key national development goals of the Russian Federation - the preservation of health and well-being of people.

^[1]Decree of the President of the Russian Federation dated 21.07.2021 No. 474 "On the National development Goals of the Russian Federation for the period up to 2030".

^[2]Order of the Ministry of Finance of the Russian Federation No. 168n dated 11.11.2022 "On Amendments to the Order of the Ministry of Finance of the Russian Federation No. 235n dated 7.11.2020 "On Setting prices not lower than which purchases (excluding imports), deliveries (excluding exports) and retail sale of alcoholic beverages with a strength of over 28% are carried out." http://publication.pravo.gov.ru/Document/View/0001202212090008 (date of application: 2.03.2023).   

^[3] World Health Organization. WHO report on the global tobacco epidemic 2021: addressing new and emerging products. 2021. 27 July, https://www.who.int/publications/i/item/9789240032095 (date of application: 2.04.2023)

^[4] T. Karabut, What's wrong with excise taxes on sugary drinks//Rossiyskaya Gazeta. ¹260(8908). https://rg.ru/2022/11/16/vyhlop-gazirovki.html ., date of request: 2.03.2023