Would you drink fewer cans of soda if a national tax jacked up the price?
When it comes to schemes to counter the staggering rates of obesity and diabetes around the world, there’s a growing consensus that taxes that force consumers to reckon, via their pocketbooks, with their food and drink habits might be the way to go.
But since so few countries — or cities — have dared to try a “sin” tax on soda or junk food, no one really knows if they’d actually work.
Mexico is one of only a few countries in the world that have managed to pass and implement such a tax. (France has done it, too, and Chile is working on it.)
In January 2014, the price of all sodas and other sugary drinks in Mexico went up by 1 peso (about 7 cents) per liter — about a 10 percent tax. The government also added an 8 percent tax on unhealthful snacks, like potato chips and cookies.
Now, a study by the Mexican National Institute of Public Health and the Carolina Population Center at the University of North Carolina, Chapel Hill suggests that the tax is working. To be clear, the results, which were released Wednesday, are highly preliminary — the study has been submitted to the prestigious U.S. journal Health Affairs, but it hasn’t yet been peer-reviewed or published.
But according to the researchers, who analyzed data on household consumption in 53 Mexican cities, purchases of sugary beverages dropped 6 percent on average in 2014 compared with pretax trends. And by December 2014, they’d gone down by 12 percent, compared with previous years. The study adjusted for other factors, like the overall downward trend in soda consumption, wages and unemployment.
“Despite promotions and marketing strategies [from beverage companies to counter the tax], the effect of the soda tax in Mexico has been successful,” Juan Rivera, a researcher at Mexico’s National Institute of Public Health who was involved with the study, tells The Salt. “Along with other strategies the Mexican government is using, I hope that intake of sugar-sweetened beverages will continue to drop.”
As you can see from this handy soda consumption chart from our pals over at Goats and Soda, Mexico comes in fourth worldwide, with about 139 soft drink purchases per capita in 2014. And according to one study looking at the public health burden of sugar-sweetened beverages, some 4,100 deaths per year in Mexico can be attributed to consumption of them.
Not only did people in Mexico drink fewer sodas with the tax but they also drank more water, according to the researchers.
The tax has been controversial in Mexico, especially in the business community. Unsurpisingly, the beverage industry lobbied hard against it, says Rivera. As Marc Silver over at Goats and Soda reports, Big Soda companies are investing heavily to develop new markets in low- and middle-income countries.
According to a press release touting the study results from the Nutritional Health Alliance, a Mexican public interest coalition, the beverage industry also launched marketing campaigns in Mexico, including “Share a Coke” and personalized Coca-Cola cans, in mid-2014 after the tax went into effect. Still, Rivera says, consumers, on average, chose to cut back more and more as the year wore on.
Consumption dropped most among the lowest socioeconomic group, the researchers say: That group drank 9 percent fewer sugary beverages on average in 2014 and 17 percent fewer by the end of the year, compared with pretax trends.
The government collected a total of $1.3 billion in 2014 from the tax, which it says it is using to fund programs to prevent obesity and its associated diseases — for example, making clean drinking water available in schools that don’t currently have it.
But already, advocates here say they see the Mexican study’s preliminary results as a sign that soda taxes are an effective measure for improving public health.
“It is time for federal, state and local policymakers to take real action to curb America’s rising tide of diabetes and obesity,” Harold Goldstein, executive director of the California Center for Public Health Advocacy, said in a statement. “A soda tax is a critical step. Mexico has done it for their residents. So can we.”
Rivera says he’s working to get funding to continue to measure the impact of the Mexican tax in 2015. The 2014 study was funded by Bloomberg Philanthropies and the Robert Wood Johnson Foundation. Barry Popkin of UNC, who was also involved with the study, says the funders were “completely hands off on our methods, data work.”
Also in the meantime, Mexico’s Nutritional Health Alliance says it will be lobbying the government to increase the tax from 10 percent to 20 percent to take more of the fizz out of soda sales.