Mexican soda tax cuts sales of sugary soft drinks by 6% in first year

http://www.theguardian.com/world/2015/jun/18/mexican-soda-tax-cuts-sales-first-year

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A tax on Coca-Cola and other sugar-sweetened drinks in Mexico has succeeded in bringing down sales, which experts hope will help curb the nation’s obesity problem.

The 10% tax was implemented on 1 January 2014 after a battle with the beverage industry. More than 30% of the Mexican population is obese and a love of Coca-Cola and other sugary drinks has been held at least partly responsible. The average Mexican drinks the equivalent of 163 litres of Coca-Cola a year, or nearly half a litre a day.

The Mexican National Institute of Public Health and the University of North Carolina have now carried out an evaluation of the impact of the tax, which shows it cut purchases by an average of 6% across 2014, and by as much as 12% in the last part of the year.

The effect was greatest on lower-income households, who cut their purchases by an average of 9% across the 12 months, and by 17% in the later months. The impact appears to be similar to that of taxes on tobacco and other goods that are hard to give up, where the drop in sales increases over time.

“This data is relevant given that in Mexico complications from diabetes can lead a family to bankruptcy,” said Fiorella Espinosa, nutritional health researcher at El Poder del Consumidor, one of the consumer and health groups that campaigned for the tax. “Health expenditures due to the consumption of sugar-sweetened beverages are greatest among the poorest families and can serve as a cause of impoverishment.”

At 10% the tax was lower than campaigners wanted. The campaigners’ umbrella group, the Nutritional Health Alliance, is now calling for an increase to 20%, in line with recommendations from public health experts. They also want VAT abolished on bottled water under 10 litres, to make it cheaper than sugary drinks.

The alliance is calling on the government to make good its promise to use the tax revenues raised – more than 18bn pesos (£745m) in 2014 – to ensure there is free drinking water in schools and to introduce other anti-obesity measures.

Dr Mike Rayner, of the department of public health at Oxford University, a leading authority on the likely impact of food taxes, said: “My immediate reaction is that it is great that it is actually working, because we need more examples of this sort of evaluation of actual taxes to confirm what we know from the modelling about these taxes.”

Few such food and drink taxes have been brought in and their critics argue they do not work. However, Rayner said, the Mexican results were in line with predictions.

Modelling a tax of 20% or 20p per litre in the UK, Rayner demonstrated in a paper for the British Medical Journal that around 200,000 cases of obesity would be prevented or delayed. “That’s about a 1% drop in obesity, but it makes a lot of difference because obesity is so prevalent across the country,” he said.

France brought in a tax on all soft drinks after the industry objected to a tax on those that are sugar-sweetened. Berkeley in California recently voted to introduce the first soda tax in the USA, after a huge battle with opponents. Proposals to introduce soda taxes elsewhere, such as in New York, have failed.