In March 2016, the United Kingdom government announced that it will introduce a ‘sugar tax' on the producers of fizzy soft drinks in order to reduce child obesity.

Mark scheme

Marking points from the official mark scheme (May/June 2018). The mark or mark type is shown in brackets.

1. [Up to 4 marks] For knowledge and understanding and application in the case of direct, progressive taxes
2. [1] 1 mark for a valid example
3. [1] 1 mark for a clear idea of meaning of 'direct'
4. [Up to 2 marks] Up to 2 marks for an explanation of a progressive tax
5. [Up to 4 marks] For knowledge and understanding and application in the case of indirect, regressive taxes
6. [1] 1 mark for a valid example
7. [1] 1 mark for a clear idea of meaning of 'indirect'
8. [Up to 2 marks] Up to 2 marks for an explanation of a regressive tax
9. [8] Candidates need to display good knowledge and understanding of the distinction between direct and indirect taxes and taxes that are progressive and regressive. They then need to apply these concepts o provide an example of each type of tax.
10. [Up to 4 marks] For analysis of the impact of a sugar tax
11. This should explain the impact of the tax upon supply and make due reference to the significance of the price elasticity of demand. Credit accurate diagrams.
12. [Up to 4 marks] For analysis of the impact of an educational campaign
13. This should explain the impact of the campaign upon the demand curve for 'fizzy soft drinks' or similar products. Credit accurate diagrams.
14. (AN: Up to 8 marks maximum)
15. [Up to 4 marks] For evaluation as to whether the new tax or an educational campaign is more likely to reduce child obesity with 1 mark reserved for a reasoned conclusion
16. (EV: Up to 4 marks maximum)
17. [12] The imposition of an indirect tax will shift the supply curve to the left raising price and reducing quantity demanded. The impact depends upon the price elasticity of demand for the product.
18. An educational campaign will shift the demand curve for the product to the left. This will reduce price and result in a fall in the quantity demanded. The impact depends upon the effectiveness of the campaign.