This paper discusses efficiency considerations underlying the widespread exemption of food from sales and value added taxes, in contrast to the distributional considerations usually used to justify them, analyzing the implications for tax policy. Although there are increasing returns in both...

We evaluate efficiency considerations underlying the widespread exemption of food from sales and value added taxes and the implications for tax policy. Household and restaurant meals and both constant and increasing returns cases are examined. Higher taxes on food offset the non-taxation of time...