TY - JOUR
T1 - Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile: A time series analysis
AU - Cuadrado, Cristóbal
AU - Dunstan, Jocelyn
AU - Silva-Illanes, Nicolas
AU - Mirelman, Andrew J.
AU - Nakamura, Ryota
AU - Suhrcke, Marc
PY - 2020/1/1
Y1 - 2020/1/1
N2 - Chile is one of several countries that recently implemented a fiscal policy to reduce soft drink (SD) intake and obesity. In 2014 the government increased the existing ad-valorem tax on high-sugar SD by 5% and decreased by 3% the tax on low-sugar SD, based on a 6.25gr/100 ml sugar threshold. This study aims to evaluate the tax modification passed-on to consumers through prices, and to calculate changes in affordability of SD. We analysed nationally representative consumer price index data of 41 soft drinks within 6 beverage categories between 2009 and 2016. Price change post-tax implementation was estimated for different categories (carbonates, juices, concentrates, waters and energy-sport drinks), using time-series analyses. In addition, changes in affordability were evaluated by estimating the changes in prices relative to wages. The price of carbonates increased by 5.60% (CI 95% 3.18–8.03%) immediately after the tax was implemented. A sustained increase in the prices of concentrates was observed starting after the implementation. Unexpectedly, a smaller, increase was also seen for the price of bottled water – a category that saw no tax change. There were no effects for juices, energy-sports drink products, even when their prices were expected to increase due to the policy. There was a reduction in affordability for carbonates, concentrates and waters. Overall, the fiscal policy was effective in increasing prices and some signs of reduced affordability. Results varied substantially among categories directly affected by the tax policy. While for carbonates the price increase exceeded the tax change (‘over-shifting’), in other categories subject to a tax cut, a price reduction was expected but the opposite occurred. As the effect of the tax on prices differed between categories, the effects of the tax policy on consumption patterns are likely to be mixed. Our findings underline the need to better understand and anticipate price setting behaviour of firms in response to a tax.
AB - Chile is one of several countries that recently implemented a fiscal policy to reduce soft drink (SD) intake and obesity. In 2014 the government increased the existing ad-valorem tax on high-sugar SD by 5% and decreased by 3% the tax on low-sugar SD, based on a 6.25gr/100 ml sugar threshold. This study aims to evaluate the tax modification passed-on to consumers through prices, and to calculate changes in affordability of SD. We analysed nationally representative consumer price index data of 41 soft drinks within 6 beverage categories between 2009 and 2016. Price change post-tax implementation was estimated for different categories (carbonates, juices, concentrates, waters and energy-sport drinks), using time-series analyses. In addition, changes in affordability were evaluated by estimating the changes in prices relative to wages. The price of carbonates increased by 5.60% (CI 95% 3.18–8.03%) immediately after the tax was implemented. A sustained increase in the prices of concentrates was observed starting after the implementation. Unexpectedly, a smaller, increase was also seen for the price of bottled water – a category that saw no tax change. There were no effects for juices, energy-sports drink products, even when their prices were expected to increase due to the policy. There was a reduction in affordability for carbonates, concentrates and waters. Overall, the fiscal policy was effective in increasing prices and some signs of reduced affordability. Results varied substantially among categories directly affected by the tax policy. While for carbonates the price increase exceeded the tax change (‘over-shifting’), in other categories subject to a tax cut, a price reduction was expected but the opposite occurred. As the effect of the tax on prices differed between categories, the effects of the tax policy on consumption patterns are likely to be mixed. Our findings underline the need to better understand and anticipate price setting behaviour of firms in response to a tax.
KW - Chile
KW - Sugar-sweetened beverage
KW - Soda
KW - Soft drink
KW - Tax
KW - Fiscal policy
KW - Taxation
KW - Price
KW - Affordability
UR - http://www.mendeley.com/research/effects-sugarsweetened-beverage-tax-prices-affordability-soft-drinks-chile-time-series-analysis
U2 - 10.1016/j.socscimed.2019.112708
DO - 10.1016/j.socscimed.2019.112708
M3 - Article
C2 - 31862547
SN - 0277-9536
VL - 245
SP - 112708
JO - Social Science and Medicine
JF - Social Science and Medicine
M1 - 112708
ER -