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Simulating international tax designs on sugar-sweetened beverages in Mexico.

ABSTRACT: In response to the high prevalence of overweight and obesity, Mexico implemented a volumetric tax of one Mexican peso (MP) per liter of sugar-sweetened beverage (SSB) in 2014. In contrast to Mexico's volumetric tax design, the United Kingdom (UK) and South Africa (ZA) implemented SSB taxes based on sugar density. This kind of tax is likely to yield larger health benefits than volumetric taxes by imposing a larger tax burden on high-sugar SSB and/or encouraging reformulation. However, sugar-density taxes might yield lower tax revenues. This study aims to simulate the effect of sugar-density taxes as those in the UK and ZA on SSB purchases (in terms of volume and sugar), SSB prices, and tax revenue in Mexico and compare this effect to its counterpart under the current volumetric SSB tax. Additionally, we simulate the effect of sugar-density taxes under different scenarios of reformulation. We conducted all these simulations based on a structural model of demand and supply using household purchase data for 2012-2015 in urban Mexico. We found that the current volumetric one-MP tax led to an SSB purchase reduction of 19% for both volume and sugar and an SSB price increases by MP $1.24. We simulated similar effects under the UK and ZA sugar-density taxes when these taxes were equivalent to the volumetric one-MP tax, and there was no reformulation. When assuming reformulation, the sugar reduction under the sugar-density taxes was up to twice larger than the volumetric one-MP tax. However, we found that the volumetric one-MP tax yielded the largest tax revenue across all tax designs. From a public health perspective, sugar-density taxes are likely to be more effective in tackling the overweight and obesity prevalence in Mexico; however, tax revenue might be lower under these taxes.

SUBMITTER: Salgado Hernandez JC

PROVIDER: S-EPMC8375996 | biostudies-literature |

REPOSITORIES: biostudies-literature

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Project description:Study questionWhat has been the effect on purchases of beverages from stores in Mexico one year after implementation of the excise tax on sugar sweetened beverages?MethodsIn this observational study the authors used data on the purchase of beverages in Mexico from January 2012 to December 2014 from an unbalanced panel of 6253 households providing 205 112 observations in 53 cities with more than 50 000 inhabitants. To test whether the post-tax trend in purchases was significantly different from the pretax trend, the authors used a difference in difference fixed effects model, which adjusts for both macroeconomic variables that can affect the purchase of beverages over time, and pre-existing trends. The variables used in the analysis included demographic information on household composition (age and sex of household members) and socioeconomic status (low, middle, and high). The authors compared the predicted volumes (mL/capita/day) of taxed and untaxed beverages purchased in 2014-the observed post-tax period-with the estimated volumes that would have been purchased if the tax had not been implemented (counterfactual) based on pretax trends.Study answer and limitationsRelative to the counterfactual in 2014, purchases of taxed beverages decreased by an average of 6% (-12 mL/capita/day), and decreased at an increasing rate up to a 12% decline by December 2014. All three socioeconomic groups reduced purchases of taxed beverages, but reductions were higher among the households of low socioeconomic status, averaging a 9% decline during 2014, and up to a 17% decrease by December 2014 compared with pretax trends. Purchases of untaxed beverages were 4% (36 mL/capita/day) higher than the counterfactual, mainly driven by an increase in purchases of bottled plain water.What this study addsThe tax on sugar sweetened beverages was associated with reductions in purchases of taxed beverages and increases in purchases of untaxed beverages. Continued monitoring is needed to understand purchases longer term, potential substitutions, and health implications.Funding, competing interests, data sharingThis work was supported by grants from Bloomberg Philanthropies and the Robert Wood Johnson Foundation and by the Instituto Nacional de Salud Pública and the Carolina Population Center. The authors have no competing interests. No additional data are available.

Project description:BackgroundRising greenhouse gas emissions (GHGEs) have implications for health and up to 30 % of emissions globally are thought to arise from agriculture. Synergies exist between diets low in GHGEs and health however some foods have the opposite relationship, such as sugar production being a relatively low source of GHGEs. In order to address this and to further characterise a healthy sustainable diet, we model the effect on UK non-communicable disease mortality and GHGEs of internalising the social cost of carbon into the price of food alongside a 20 % tax on sugar sweetened beverages (SSBs).MethodsDeveloping previously published work, we simulate four tax scenarios: (A) a GHGEs tax of £2.86/tonne of CO2 equivalents (tCO2e)/100 g product on all products with emissions greater than the mean across all food groups (0.36 kgCO2e/100 g); (B) scenario A but with subsidies on foods with emissions lower than 0.36 kgCO2e/100 g such that the effect is revenue neutral; (C) scenario A but with a 20 % sales tax on SSBs; (D) scenario B but with a 20 % sales tax on SSBs. An almost ideal demand system is used to estimate price elasticities and a comparative risk assessment model is used to estimate changes to non-communicable disease mortality.ResultsWe estimate that scenario A would lead to 300 deaths delayed or averted, 18,900 ktCO2e fewer GHGEs, and £3.0 billion tax revenue; scenario B, 90 deaths delayed or averted and 17,100 ktCO2e fewer GHGEs; scenario C, 1,200 deaths delayed or averted, 18,500 ktCO2e fewer GHGEs, and £3.4 billion revenue; and scenario D, 2,000 deaths delayed or averted and 16,500 ktCO2e fewer GHGEs. Deaths averted are mainly due to increased fibre and reduced fat consumption; a SSB tax reduces SSB and sugar consumption.ConclusionsIncorporating the social cost of carbon into the price of food has the potential to improve health, reduce GHGEs, and raise revenue. The simple addition of a tax on SSBs can mitigate negative health consequences arising from sugar being low in GHGEs. Further conflicts remain, including increased consumption of unhealthy foods such as cakes and nutrients such as salt.

Project description:BackgroundOn October 1, 2014, the Chilean government modified its previous sugar-sweetened beverage (SSB) tax, increasing the tax rate from 13% to 18% on industrialized beverages with high levels of sugar (H-SSBs) (greater than 6.25 grams [g] sugar/100 milliliters [mL]) and decreasing the tax rate from 13% to 10% on industrialized beverages with low or no sugar (L-SSBs) (less than 6.25 g sugar/100 mL). This study examines changes in beverage prices and household beverage purchases following the implementation of the tax reform.Methods and findingsWe used longitudinal data collected between January 1, 2013, and December 31, 2015, from 2,000 households. We defined the pretax period as January 1, 2013, to September 30, 2014, and the posttax period as October 1, 2014, to December 31, 2015. We conducted a pre-post analysis for changes in prices and purchases, with the latter examined by volume and calories. We compared posttax changes in prices and purchases to a counterfactual, defined as what would have been expected in the posttax period based on pretax trends. All results are stated as comparisons to this counterfactual. We linked beverages at the bar code level to nutrition facts panel data collected by a team of Chilean nutritionists who categorized them by taxation level and beverage subcategory, which included carbonated and noncarbonated H-SSBs and concentrated, ready-to-drink L-SSBs and untaxed beverages. We reconstituted concentrated beverages and analyzed all beverages using as-consumed volumes and calories. Posttax monthly prices of H-SSBs increased, but these changes were small. Prices of carbonated H-SSBs increased by 2.0% (95% confidence interval [CI] 1.0%-3.0%), while those of noncarbonated H-SSBs increased by 3.9% (95% CI 1.6%-6.2%). Prices of L-SSB concentrates decreased after the tax by 6.7% (95% CI -8.2%--4.6%), and prices of ready-to-drink L-SSBs increased by 1.5% (95% CI 0.3%-2.7%). Households decreased monthly per capita purchases of H-SSBs by 3.4% by volume (95% CI -5.9%--0.9%) and 4.0% by calories (95% CI -6.3%--1.9%), and this change was greater among high socioeconomic status (SES) households. The volume of household purchases of L-SSBs increased 10.7% (95% CI 7.5%-13.9%), while that of untaxed beverage purchases decreased by 3.1% (95% CI -5.1%--1.1%). The main limitation of this study was that there was no control group, so we were unable to assess the causal impact of the tax.ConclusionsThe modifications of Chile's SSB tax were small, and observed changes in prices and purchases of beverages after the tax were also small. Our results are consistent with previous evidence indicating that small increases in SSB taxes are unlikely to promote large enough changes in SSB purchases to reduce obesity and noncommunicable diseases (NCDs).

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Simulating international tax designs on sugar-sweetened beverages in Mexico.

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