Mexico had one of the world's highest rates of sugary-drink consumption and a rising obesity problem, and price was the few levers the state had not pulled.
From 1 January 2014 the government levied a one-peso-per-litre excise on sugar-sweetened beverages, a flat per-litre charge rather than a percentage of retail price.
Using household purchase data, researchers found purchases of taxed beverages fell 5.5% in 2014 and 9.7% in 2015, an average reduction of 7.6% across the two years.
Tax the sugar per liter so reformulation beats the tax
A per-unit excise scales with the sugary drink bought, so it cannot be absorbed by a price mark-up the way a percentage tax can.
Targeting sugar-sweetened beverages leaves diet drinks and water untaxed, giving consumers a cheaper substitute.
The tax gave producers an incentive to put less sugar in a product rather than lobby to keep the price unchanged.
The revenue fed public-health spending, strengthening the case for keeping the levy.
A per-unit excise on the harmful ingredient shifts the relative price and pushes makers to change the product, not just the price to the consumer.
The reduction was sustained into the second year and was largest among the poorest households, and a broader study confirmed continued declines; the design became a reference for drink taxes in other countries.
FOLLOW THE EVIDENCE
The sources
- In Mexico, evidence of sustained consumer response two years after implementing a sugar-sweetened beverage tax Health Affairs via PubMed · pubmed.ncbi.nlm.nih.gov
- In Mexico, evidence of sustained consumer response two years after implementing a sugar-sweetened beverage tax Europe PMC · europepmc.org ·