Economics (AS & A Level) · Feb / March 2025 · Paper 32 · Question 11

A government introduced a tax on soft drinks containing sugar. It was forecast that the tax would raise £520m per year for the government. However, the tax received was £240m. What is the most likely reason why the tax collected was lower than forecast?

1. Aa specific tax instead of an ad valorem tax was introduced
2. Bfewer drinks than originally forecast contained sugar
3. Cmost retailers did not increase the price of soft drinks
4. Dthe demand for soft drinks was price inelastic

As printed in the paper