Sugary Drink Tax In Mexico Resulted In Noticeable Drop In Sales: The Pros And Cons Of Beverage Taxation
In January of 2014, Mexico did what New York City couldn't — tax soda. A new study, published in the British Medical Journal, examined how Mexico's 10 percent tax on not just soda, but all sugar sweetened drinks affected beverage sales over the course of a year.
For the study, Mexico surveyed 6,200 households throughout 53 large cities, tracking beverage purchases for more than 50,000 people in total from January to December 2014. Researchers then compared the purchasing patterns from an average of past years and found there was a 6 percent drop in sugary beverage drink purchases post-tax. By the end of the year, the percentage drop doubled to 12 percent fewer purchases, totaling to an average of 4.2 fewer liters of sugary beverage purchases in 2014.
In turn, purchases on untaxed beverages, like bottled water increased 4 percent — that's 12.8 more liters of untaxed beverages. The cutback on sugary beverages was greatest among lower-income families.
Researchers conclude the short term change "is moderate, but important to understand purchases longer term, potential substitutions, and health implications." They believe taxation can be effectively used to help fight against obesity, as well as improve overall food education.
Over in the UK, British lawmakers recently urged the government to introduce a similar tax to drive down sugary drink sales. The proposal was part of a larger effort to tackle obesity, which reportedly costs the Parliament's Health Committee 5.1 billion pounds ($7.6 billion) each year. The prime minister didn't approve of the tax, and instead announced the government would unveil a national strategy to fight childhood obesity.
In America, a statewide soda tax was proposed in order to decrease the rates of type 2 diabetes and heart disease. A study, published in the journal PLOS One, found such a tax would most benefit low-income populations and minority communities, given prior research that shows these populations experience higher rates of chronic health conditions related to obesity.
Previous calculations by researchers indicate that a penny-per-ounce tax would result in adults drinking 15 percent fewer sugar drinks over the course of 10 years. The tax would also equal to positive impacts on disease risk across all demographics.
On the other side of the argument, a 2013 study found if the New York City Bloomberg soda tax passed, people would just find an equally sugary substitute. The findings indicated that lower-income families buy soda more often than higher-income families, so the tax would create a hurdle for the lower-income population, ultimately forcing them to look for another way to get their sweet fix. If every sugar-laden drink were to be taxed, though, then that's a different story.
Source: Colchero MA, Popkin BM, Rivera JA, and Nh SW. Beverage purchases from stories in Mexico under the excise tax on sugar sweetened beverages: observational study. BMJ. 2016.