Sugary drink excise tax policy process and implementation: Case study from Saudi Arabia

Abstract

Saudi Arabia’s residents are the fifth-largest consumers of calories from sugar-sweetened beverage (SSB) globally, likely contributing to high rates of overweight and obesity. In 2017, Saudi Arabia implemented the largest SSB tax worldwide, increasing the prices of soft and energy drinks by 50% and 100%, respectively. The purpose of this research is to add to the global discussion on SSB tax design and policy process by highlighting the Saudi Arabia’s barriers and facilitators to implementation. We conducted semi-structured interviews with a purposive sample of ten informants among key stakeholders, including government, industry, and health organizations who worked on the sugary drink tax in Saudi Arabia. Interviews were conducted in the five months following tax implementation in June 2017. The questions were designed to understand how the tax originated, the motivations for its structure, and the barriers and facilitators associated with its implementation. A descriptive analysis was conducted. Our results suggest that energy drinks were perceived as more harmful than other soft drinks and thus taxed at a higher rate. We also found that the tax was perceived to be easy to administer by all stakeholders. Post tax implementation, some stakeholders expressed concern about pressures from the World Trade Organization requiring scientific justification for the specific tax rates and beverage categories. In response to the tax, the beverage industry reportedly reduced retail prices and absorbed some of the tax costs. There is a strong interest from the Saudi government in expanding the tax to include all SSBs and other food categories. In conclusion, there were several factors unique to the Saudi environment that facilitated tax implementation. However, our study highlights the importance of explicitly articulating a clear evidence-based rationale for SSB tax administration to enhance sustainability.