Simulating international tax designs on sugar-sweetened beverages in Mexico.

Juan Carlos Salgado Hernández,Shu Wen Ng,Guillermo Paraje

doi:10.1371/journal.pone.0253748

Juan Carlos Salgado Hernández, Shu Wen Ng + Show 1 more

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https://doi.org/10.1371/journal.pone.0253748

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Abstract

In response to the high prevalence of overweight and obesity, Mexico implemented a volumetric tax of one Mexican peso (MP) per liter of sugar-sweetened beverage (SSB) in 2014. In contrast to Mexico's volumetric tax design, the United Kingdom (UK) and South Africa (ZA) implemented SSB taxes based on sugar density. This kind of tax is likely to yield larger health benefits than volumetric taxes by imposing a larger tax burden on high-sugar SSB and/or encouraging reformulation. However, sugar-density taxes might yield lower tax revenues. This study aims to simulate the effect of sugar-density taxes as those in the UK and ZA on SSB purchases (in terms of volume and sugar), SSB prices, and tax revenue in Mexico and compare this effect to its counterpart under the current volumetric SSB tax. Additionally, we simulate the effect of sugar-density taxes under different scenarios of reformulation. We conducted all these simulations based on a structural model of demand and supply using household purchase data for 2012-2015 in urban Mexico. We found that the current volumetric one-MP tax led to an SSB purchase reduction of 19% for both volume and sugar and an SSB price increases by MP $1.24. We simulated similar effects under the UK and ZA sugar-density taxes when these taxes were equivalent to the volumetric one-MP tax, and there was no reformulation. When assuming reformulation, the sugar reduction under the sugar-density taxes was up to twice larger than the volumetric one-MP tax. However, we found that the volumetric one-MP tax yielded the largest tax revenue across all tax designs. From a public health perspective, sugar-density taxes are likely to be more effective in tackling the overweight and obesity prevalence in Mexico; however, tax revenue might be lower under these taxes.

Highlights

By 2012, more than a third of children and teenagers and 71% of adults in Mexico were overweight or had obesity following a sustained increase since 2000 [1, 2]
All sugar-sweetened beverage (SSB) will be subject to a tax under the ZA tax design, and most SSBs will be subject to the high-levy tax (i.e., >8 sugar grams per 100 ml) under the United Kingdom (UK) tax design
We simulated the effect of the UK and ZA sugar-density taxes on SSB purchases, SSB prices, and tax revenue in Mexico

Summary

Introduction

By 2012, more than a third of children and teenagers and 71% of adults in Mexico were overweight or had obesity following a sustained increase since 2000 [1, 2]. Non-communicable diseases associated with overweight and obesity, such as diabetes mellitus, have risen and contributing to large but preventable losses in health and wellbeing [3]. The Mexican Ministry of Health estimates that overweight, obesity, and its related non-communicable diseases (NCD) account for 34% of the national health expenditure or 1% of gross. Simulating international tax designs on sugar-sweetened beverages in Mexico (https://www.nielsen.com/us/en/client-learning/ consumer-panel-services/). We did not have any special access privileges to the data (we paid for a data license) and got it through the data vendor, the Nielsen Company. Please see: Consumer Panel Services – Nielsen Please see: Consumer Panel Services – Nielsen (https://www. nielsen.com/us/en/client-learning/consumer-panelservices/)

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