More Soda Tax Success: Study Finds Mexico’s Tax Reduced Sugary Beverage Buys Two Years in A Row
Another day, another study that shows soda taxes work to reduce the consumption of beverages associated with costly chronic diseases in children and adults.
This time it’s a study on Mexico’s sugar-sweetened beverage tax, which went into effect at the start of 2014 and tacked on 1 peso per liter of sugary drink. Published this month in the journal Health Affairs, the study found that purchases of sugary drinks subject to the new tax went down more than 5 percent in 2014 and nearly 10 percent in 2015. At the same time, purchases of untaxed drinks went up by slightly more than 2 percent. The study notes that prevalence of overweight and obesity reached 70 percent among Mexico’s adults and 30 percent among the country’s children as of 2012. In addition, sugar-sweetened beverages account for 70 percent of added sugars in the typical Mexican diet, making sugary beverages a “logical target for lowering the intake of added sugars,” the study stated.
To conduct the study, researchers used data on monthly household store purchases from the Nielsen’s Mexico Consumer Panel Services between January 2012 and December 2015. They found that purchases of taxed beverages declined by an average of 5.5 percent in 2014 and 9.7 percent in 2015, resulting in an overall average decline of 7.6 percent. Purchases of taxed sugary drinks went down at all socioeconomic levels, though such reductions were largest among the lowest-income households.
Researchers noted that the larger purchasing decline in the second year after the tax was enacted “suggests that in the case of these beverages, the long-term impact of a price change may also be larger than the short-term effect.” They went on to say that such results contradict statements from the beverage industry that the effects of a soda tax tend to wane after the first year of implementation. Researchers also noted that declines in sugary beverage consumption could have positive impacts on people’s health as well as on health care expenditures in Mexico. Study authors M. Arantxa Cochero, Juan Rivera-Dommarco, Barry Popkin and Shu Wen Ng write:
Given the sustained effect of the tax on sugar-sweetened beverages over a two-year period and findings that responses to prices of cigarettes (price-elasticities) increase monotonically with prices, the impact of the tax on sugar-sweetened beverages in Mexico could be increased by raising the tax to at least 2 pesos per liter (resulting in a 20 percent increase in price). At the global level, findings on the sustained impact over two years of taxes on the beverages in Mexico may encourage other countries to use fiscal policies to reduce the consumption of unhealthy beverages along with other interventions to reduce the burden of chronic diseases.
Of course, this study isn’t the only one to show the positive impacts of sugary beverage taxes. This study on Berkeley’s soda tax found a whopping 21 percent decrease in sugary beverage consumption. At Harvard, researchers predicted that Philadelphia’s sugary beverage tax, which went into effect this year, could prevent 36,000 cases of obesity over 10 years, prevent more than 2,000 cases of diabetes in the first year after the tax reaches its full effect, and save $200 million in health care costs over a decade. (On a side note, Pepsi recently announced it was laying off workers at its Philadelphia-area plants due to the new soda tax. However, a spokesperson for the city called the action a “new low,” citing the company’s $6 billion in profits last year. In addition, the mayor’s office recently announced that the city is on track to meet soda tax-related revenues, which are being invested in education and anti-poverty programs.)
Last year, voters approved soda taxes in Oakland, San Francisco and Albany, California, and in Boulder, Colorado. In San Francisco alone, officials predict the soda tax will generate $7.5 million in fiscal year 2017-2018 and $15 million in fiscal year 2018-2019. In Boulder, the approved ballot initiative requires the city to release an annual report showing how soda tax revenues are used — the revenues are intended to support healthier school food initiatives as well as programs aimed at preventing diabetes and other costly chronic diseases.
Research shows that sugary drink consumption is associated with a higher risk of developing type 2 diabetes. The American Diabetes Association estimates that the cost of diabetes in the U.S. went from $174 billion in 2007 to $245 billion in 2012 — that’s a 41 percent increase in just five years.
For a copy of the new study on Mexico’s soda tax, visit Health Affairs.
Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for 15 years.