A new tax in Mexico of 1 peso per liter on sugar-sweetened drinks has resulted in a significant reduction in sales, posing potential implications for public health policy discussions and decisions.
Researchers from Mexico and the US - who used nationally representative food purchase data from more than 6,200 Mexican households in 53 large cities - report their findings in The BMJ.
On January 1st, 2014, Mexico enforced the excise tax of 1 peso per liter on beverages sweetened with sugar. The country has some of the highest levels of diabetes, overweight and obesity in the world, making reductions in sugar consumption an important target for public health reasons.
According to the team, at any time, an obese person incurs around 30% higher medical expenses than someone who is of a healthy weight.
In the US, the annual estimated medical cost of obesity was $147 billion in 2008, putting the US not far behind Mexico when it comes to health and financial obesity costs.
To investigate the impact the new tax had on sales of sugary drinks in Mexico, the researchers used a statistical model that adjusted for several factors, including age, sex, socioeconomic status and other economic factors, such as employment and salaries where individuals lived.
Sugary drink purchases down, non-taxed drink sales up
Results showed that sales of taxed beverages decreased by around 6% in 2014, compared with anticipated purchases in absence of the tax. What is more, the reductions increased over time and reached a 12% decrease as of December 2014.
This means that during 2014, the average Mexican living in an urban area bought 4.2 fewer liters of taxed beverages than what they would have without the tax put in place.
Fast facts about obesity in the US
- More than a third of adults are obese
- There is no significant relationship between obesity and education among men
- But among women, those with college degrees are less likely to have obesity, compared with less-educated women.
Interestingly, sales of untaxed beverages - including plain bottled water - were 4% higher than expected, which equates to the purchase of 12.8 more liters of untaxed drinks by the average urban-residing Mexican in 2014.
Drilling down into the various levels of socioeconomic groups (low, middle, high), the researchers found that all three groups reduced their purchases of taxed beverages. However, the reduction was the largest among households with a low socioeconomic status.
Despite the significant findings, the researchers caution that their study is observational and that cause and effect cannot be determined. Other limitations include incomplete data on dairy beverages and the fact that they focused on Mexican cities.
Because the researchers only focused on people living in cities with more than 50,000 residents, their sample does not represent important subpopulations living in rural areas, which comprise about 25% of food and beverage expenditures in the country.
The team adds that because they observed a bigger reduction in purchases of taxed drinks in households with a low socioeconomic status, they "hypothesize that reductions among rural households would be greater than those among urban households."
They add, however, that without concrete data, their assumption is "purely speculative."
'Taxes cannot be viewed as magic bullet against obesity'
In a linked editorial to the study, Franco Sassi, senior health economist at the Organisation for Economic Co-operation and Development (OECD), says that taxes have a "legitimate place in the public health policy toolkit."
He points to other countries that have chosen to implement taxes on foods and beverages in order to improve public health, adding:
"These results are not surprising, but their empirical confirmation is of the greatest importance for governments that have opted to use taxes on sugar-sweetened beverages as part of public health strategies, and those considering to do it."
However, he warns that using taxes as a means to improving the public's diet is "especially complex." If the taxes are set too high, it can be politically challenging and increase the risk of unintentional issues.
While he notes that taxes can be a beneficial public health strategy, he adds that "they cannot be viewed as a magic bullet in the fight against obesity."
"Taxes do have a place in a broader strategy in countries that are facing disproportionate harms from unhealthy diets," he says, "but having to make people pay for their potentially unhealthy consumption choices is not a success for public health."
The researchers add that the short-term change they observed "is moderate but important, and it will be critical to continue monitoring purchases to note whether the trend continues or stabilizes."
Medical News Today previously investigated how much sugar is in your food and drink.