Unintended Consequences: The Economic Impact of the Sugar Tax on Small Stores and Bakeries in Mexico

Unintended Consequences: The Economic Impact of the Sugar Tax on Small Stores and Bakeries in Mexico

(originally published on 4 January 2017, The Diplomatic Courier)

The Diplomatic Courier published an article on economic impacts of the sugar tax on small businesses in Mexico on 4 January 2017.

The article discusses negative economic consequences of the beverage and food tax, introduced in 2014, on small businesses around Mexico.

Read the full article here:

http://www.diplomaticourier.com/2017/01/04/unintended-consequences-economic-impact-sugar-tax-small-stores-bakeries-mexico/

Soda Down in Mexico, Obesity Not So Much

Soda Down in Mexico, Obesity Not So Much

(originally published on 16 December 2016, ConscienHealth)

The ConscienHealth published an article on the actual results of the sugar tax in Mexico on 16 December 2016.

The article argues, based on new results from Mexico’s 2016 National Health and Nutrition Survey, that despite the sugar tax introduction in 2014, there has been an increase in nationwide obesity of Mexican adults between 2012 and 2016.

Read the full article here:

http://conscienhealth.org/2016/12/soda-mexico-obesity-not-much/

Mixed reactions to new study on Mexican sugar tax

Mixed reactions to new study on Mexican sugar tax

A new study on the effects of the Mexican tax on sugar sweetened beverages published in the medical journal ‘The BMJ’ has triggered different reactions among experts, after finding  a 6% drop in sales, while an increase in consumption of bottled water and other non-taxed drinks.

A research team from Mexico’s Instituto Nacional de Salud Pública, a federal health agency, and the University of North Carolina at Chapel Hill compared sales data before and after the implementation of the tax, looking at purchasing patterns in more than 6,000 households across 53 large Mexican cities. They found that on average in 2014 the sales of sugary beverages fell by 6%. The decline was particularly high among low income households, whose consumption had fallen 17%, confirming the discriminatory effect of such a tax.

Some observers looked at these findings as the proof that taxation can influence consumers’ behaviour, while others are more cautious, questioning whether such a measure is appropriate and warning of its multiple and complicated side effects. The study itself concludes that at the moment it cannot be foreseen “whether the trend continues or stabilizes” and if “consumers substitute cheaper brands or untaxed foods and beverages for the taxed ones, or adjustments occur in the longer term”.

Franco Sassi from OECD, in an editorial published on ‘The BMJ’ together with the study, underlined that taxes do not necessarily lead to healthier diets and the “full extent of substitutions made by Mexican consumers is not known”. Mr. Sassi also added that “taxes are not simple tools, and designing them to engineer an improvement in people’s diets is especially complex”. The approach to a problem like the one of obesity should be comprehensive, much broader than just taxation: education, voluntary initiatives by the industry and regulatory measures (e.g. labelling) are some examples.

“Taxes (…) cannot be viewed as a magic bullet in the fight against obesity” – he concluded.

“Mexican soda tax did not lead to reduction in total calorie consumption”, finds study

“Mexican soda tax did not lead to reduction in total calorie consumption”, finds study

A study conducted by Mexican econometricians and researchers of the Autonomous Technological Institute of Mexico (ITAM) on the impact of the tax on drinks with added sugars found that the measure failed in reducing calorie consumption and tackling overweight and obesity.

The study “Taxing Calories in Mexico” is the first large-scale analysis of the effects of the special tax introduced in 2013 by the Mexican government with the declared objective of reducing consumption of food and non-alcoholic beverages allegedly associated with overweight and obesity.

The results represent new fundamental evidence to support what a growing number of studies has demonstrated, in particular:

  1. There is no academic evidence to prove that an increase in prices deriving from a tax over “caloric food” (drinks with added sugar especially) leads to a significant reduction in total caloric consumption and/or incidence on the Body Mass Index (BMI) of people. One year after the implementation of the tax the BMI in Mexico is still increasing and the total caloric consumption decreased by less than 1% only, especially due to substitution effects.
  2. Taxes of this kind have a stronger negative impact on the poorer households since they spend a higher proportion of their income on food and beverages.

The study was funded by the Consejo Mexicano de la Industria de Productos de Consumo, A.C. (ConMéxico), which signed an agreement with ITAM to ensure full academic independence for the authors in conducting the research and using the results.

The complete study and its conclusions are available at: http://cie.itam.mx/sites/default/files/cie/15-04.pdf