It’s not every day that higher taxes manage to discourage consumers but it seems like Mexico put a tax on sugar and sales dropped 12%.
- Sales in sugary beverages dropped 12% in one year
- Mexico imposed the tax hoping to lower risks of diabetes and obesity
- Non-sugary beverages increased in sales by 4%
The tax imposed by Mexican authorities was not on sugar per say, but on sugary soda drinks specifically. The tax was of 10 percent and after one year taxed soda sales registered a decrease of 12% while untaxed beverages registered a 4% increase in sales.
The tax was implemented beginning with January 1 2014 and it added 1 peso per litre for each beverage containing sugar. The reason behind the tax is the health issues in Mexico. The country has one of the highest levels of obesity and diabetes in the world so the government decided cutting sugar consumption could be a good start for fighting against this health issues.
To find out if the tax implementation worked, researchers have evaluated data from more than 6,200 households from 53 cities with over 50,000 inhabitants, comparing purchaqses of taxed and untaxed beverages.
The statistical model included influential factors such as sex, age and socioeconomic status, plus other factors like employment or salaries. Sales reached a 12% reduction by the end of 2014. Untaxed or ‘unsugared’ beverages started replacing the taxed ones, purchases increasing by 4%.
Although everyone from the data has reduced sugary beverages consumption, the greatest reduction was made by people with a low socioeconomic status, reaching a 17% decrease by the end of 2014.
Although no definitive conclusions can be drawn from this observational study, the results are still quite reliable and suggest that the change in taxes lead to a lower consumption of the unhealthy beverages.
Therefore, taxes can definitely help the public health strategy, as many people especially those with a lower income will find it more difficult to purchase more expensive items. And since those items are unhealthy, it’s pretty much a win-win situation.
However, we cannot only rely on taxes when it comes to fighting against obesity or diabetes. Besides raising taxes, the state can also implement health education, regulatory measures and find ways to change people’s choice of diet.
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