Using Table 1, calculate the tax revenue that the government would receive each year from the tax in Option 1.

Paragraph 1: People in Lumeria drink more sugar-sweetened drinks per person than people in any neighbouring country. The health ministry links this to rising rates of obesity and type 2 diabetes. It estimates that each litre consumed creates external costs of L$0.30, mainly the cost of treatment in hospitals that are paid for by taxpayers and the working days that are lost through illness. The ministry assumes that this external cost is the same for every litre.

Paragraph 2: The government is considering three options. Option 1 is a specific indirect tax of L$0.30 per litre, paid by producers. Option 2 is a minimum price of L$1.20 per litre. Option 3 is a set of nudges: warning labels on the front of bottles, and making water the default drink in fixed-price meals. In a six-month trial in 40 shops and restaurants, Option 3 reduced purchases of sugary drinks by 6%.

Paragraph 1: One firm, FizzCo, supplies 60% of the market and earns abnormal profit on its premium brand, Zest (Table 2). FizzCo says that a tax would threaten some of the 3,000 jobs in its bottling plants, and it supports Option 3.

Paragraph 2: Anti-poverty groups point out that low-income households spend a larger share of their income on sugary drinks (Table 3), although illness related to diet is also most common in low-income households. In the neighbouring country of Borland sugary drinks are not taxed, and 15% of Lumerians live within 30 km of the border.