The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank Institute (ADBI), the Asian Development
Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences
of their use. Terminology used may not necessarily be consistent with ADB official terms.

SSB taxation in Mexico: the rational and

the impact on prices, household purchases
and employment

Arantxa Colchero
National Institute of Public Health

ADB Obesity and Fiscal Policy Training Workshop:

Tax Policy Design and Health Impact in Asia
Rational
 Burden of chronic diseases in Mexico
• Overweight and obesity: ~70% among adults, ~33% among children

• 14% prevalence of diabetes (~4.8 billion US dollars)

• Mexico is the second SSB consumer after Chile

• Added sugars: 12.5% of total energy intake (70% are SSB)

2012 National Health and Nutrition Survey

IMCO, Kilos de mas, pesos de menos:Los costos de la obesidad en México. Hernandez-Avila M et al Salud Pública Méx 2013; Vol. 55(sup 2):129-136
López Olmedo N, Carriquiri A, Rodríguez S, Ramírez I, Espinoza J, Hernández L, Campirano F, Martínez B. Usual intake of energy macronutrients in the Mexican population. 2016. J Nutr; 146(9)
Sanchez-Pimienta TG, et al. Sugar-swetened beverages are the main sources of added sugar intake in the Mexican poulation. J Nutr. 2016; 146(9).
Policy recommendations lead by INSP
Beverage recommendations
for Mexico (2008)

2007 2008 2012

Evaluate the use of One of the policy - Consider Taxing
policy instruments recommendations was unhealthy processed
such as…taxes … to consider taxing soda food (SSB and Junk
to reduce the Initiated a public debate Food) - Need own
consumption of less about the effects of SSB and cross price
healthful foods and on health which elasticities estimates
beverages eventually led to - Use of tax revenue
banning SSB in schools for obesity
and the SSB tax prevention
National Strategy for the Prevention and Control of Obesity and Diabetes, 2013

• Regulate food and beverages availability in schools

• Implement consumer friendly FOP labelling
• Regulate food marketing to children
• Taxing unhealthy processed foods
• Promote public awareness about diet and physical activity
• Promoting adoption of healthy food and physical activity through social marketing
• Support breastfeeding and appropriate feeding practices
• Primary and secondary prevention in the health care system
• Promotion of PA in recreation, work/school, transportation
• Incentives for promoting production of healthy food and for increasing affordability in
underserved geographic areas
 Strategic partnership

• Advocacy organizations: raised awareness

among the public

• Lobbying organizations: convinced members of

the Congress

INSP
• Academia: generated the evidence and had
meetings with of Ministry Finance Science: research institution
Factors enabling
• INSP provided evidence
• Nutrition: obesity and diabetes rates, consumption of added sugar, review of evidence effects on
health
• Economists: price elasticities, potential substitutes, effect on the poor, expected revenues
• Epidemiologists: effects on weight and diabetes (simulations)

• Civil Society
• Advocacy, campaigns, political mapping of supporters/opponents

• Proposal presented by a senator (supported by other senators)

• Government interested in revenues

• Population survey supporting the tax conditioned on the use of revenues

DO NOT CITE WITHOUT PERMISISON

 Motivation and legal instrument
• Motivation presented by the Government to the Congress
• High obesity rates, particularly children and adolescents
• Low nutritional value of SSB, low satiety
• Effects of high consumption on health
• High direct and indirect costs of obesity
• Objective of the tax
• To reduce the negative effects of SSB consumption on overweight and obesity and on the direct and
indirect costs associated
• Approved by the congress and included in the fiscal law*
• Tax to non-basic energy dense food was added
• Recommendation from the senate: use of revenues to prevention and treatment of chronic diseases
and to provide potable water in schools

* Ley del impuesto especial sobre producción y servicios

DO NOT CITE WITHOUT PERMISISON

 SSB tax in Mexico
• Excise tax of $1 peso per liter (~10% increase in price) to all non-alcoholic
beverages with added sugar since January 2014

• Excludes 100% juices and beverages with artificial sweeteners

• The tax is higher for larger package sizes (less expensive)

• Paid by the producer (but reflected in prices paid by consumers)

• Adjusted to inflation if the cumulative inflation reaches 10%

 Tax to sweetened sugar beverages
• Exice tax of $1.00 peso per liter -about 10% increase in price- to any beverages (non-
acoholic) with added sugar
• Producers pay the tax
Taxed beverages Untaxed beverages

• Beverages diluted in water from any type of sugar, • Any medication in liquid
• 100% juices
flavor, juice, nectar.
• Milk or infant formula
• Concentrates: powders, syrups, essences or extracts
• Diet (carbonated or uncarbonated)
with added sugar • Beverages made in restaurants, bars or sold by street
• Energy drinks with added sugar vendors
• Yogurts (for drink)
• Beverages with milk that do no comply with the
definition of milk by MoH (NOM 243-SSA-2010)

DO NOT CITE WITHOUT PERMISISON

Tax to high energy dense non-basic food
• Ad-valorem tax of 8% to non-basic food ≥ 275 kcal/100 grams

• Paid by the producer or the retailer

Taxed food Untaxed –basic food-

• Snacks (chips, popcorn, peanuts, etc) • Wheat based: tortillas, pasta, non-sweet
• Jam, jelly, conserves bread, flour, other wheat base without sugar
• Chocolate and cacao products • Maize based: tortilla, maize based food
without sugar
• Deserts (puddins, flans, gelatin)
• Other cereals: for infants, other cereal base
• Candies
food without sugar (bread)
• Peanut butter
• Cereal based food
• Ice cream

DO NOT CITE WITHOUT PERMISISON

Prices (urban and rural)
 Changes in SSB prices after the tax
Urban areas

Model SSB Carbonated SSB Non-carbonated SSB

n=26,307 n=18,015 n=8,292
Fixed effects
1.09* 1.10* 0.67*
Source: INEGI monthly prices 2011-2014, weighted using purchase distributions from Nielsen data. Fixed effects model adjusted for month, month squared, seasonality, population, GDP
and year (2013 ref) * significant at 1%

• Differential effect by: package size (higher for smaller sizes) and region

Rural areas

The tax passed though incompletely: prices increased 0.7cent

Colchero MA, Salgado JC, Unar-Munguía M, Molina M, Ng S, Rivera-Dommarco JA (2015) Changes in Prices After an Excise Tax to Sweetened Sugar Beverages Was Implemented in
Mexico: Evidence from Urban Areas. PLoS ONE 10(12): e0144408. doi:10.1371/journal.pone.0144408)
Colchero MA, Zavala JA, Batis C, Shama-Levy T, Rivera-Dommarco JA. Cambios en los precios de bebidas y alimentos con impuesto en áreas rurales y semirrurales de México. 2017. SPM
Household purchases (urban)
 Changes in household purchases
• Panel of 6,645 households in 53 cities with at least 50,000 inhabitants

• Information on daily purchases of processed food and beverages in stores

• Data from January 2012 to December 2015

• In 2014, household purchases of taxed beverages decreased by 6%

Colchero MA, Popkin BM, Rivera JA, Ng SW. Beverage purchases from stores in Mexico under the excise tax on sugar sweetened beverages: observational study . BMJ 2015;352:h6704;
doi: 10.1136/bmj.h6704
 Analytical approach
• Outcome: beverage purchases
ml/capita/day (log)
Purchases ml/capita/day

• Fixed effects model

• Dummy variable for tax

expected
• Binary variables by month
(seasonality)

• Adjusted for inflation,

sociodemographic and
observed macroeconomic variables
(unemployment rate and
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36
2012 2013 2014
minimum salary)
Month/year
 Reduction in purchases of taxed beverages

• In 2014, purchases decreased by

5.5%
• In 2015, reductions reached
9.7%
• 2014-2015: average reduction
7.6%
• -5.1 Liters/capita/year

Colchero MA, Rivera J, Popkin B, Ng S. Mexico, Evidence of Sustained Consumer Response Two Years After Implementing A Sugar-Sweetened Beverage Tax. 2017. Health Affairs. 36(3)
 Increases in purchases of untaxed beverages

• Average increase 2014-

2015: 2.1%

+ 6.6 liters/capita/year

Colchero MA, Rivera J, Popkin B, Ng S. Mexico, Evidence of Sustained Consumer Response Two Years After Implementing A Sugar-Sweetened Beverage Tax. 2017. Health Affairs. 36(3)
Reductions in purchases of taxed beverages by
socioeconomic status
Household purchases (national)
 Changes in household purchases: heterogeneity
• National Income and Expenditure Data: 2008, 2010, 2012, 2014

• Cross-sectional- Before and after, two part model (adjusted for household
income, place or residence, education head, household size, month of the
interview, lag of GDP)

• Reduction in purchases of taxed beverages: -6.3% in 2014

• Lower income households: -9%

• Urban households: -8%

• Households with children and adolescents: -10%

Colchero MA, Molina M. Guerrero López CM. After Mexico Implemented a Tax, Purchases of Sugar-Sweetened Beverages Decreased and
of Water Increased: Difference by Place of
Residence, Household Composition, and Income Level. Journal of Nutrition. 2017. Jun 14. pii: jn251892.
Health
 Potential effects on health
• Two simulation studies

• A 10% reduction in SSB in SSB consumption assuming a 39% caloric

compensation could save in 10 years 189 thousand cases of diabetes
and other chronic diseases and save 983 million USD

• A 6% reduction in SSB consumption could lead to a 2.5% reduction in

obesity, and save up to 86 thousand of diabetes cases

Sanchez-Romero LM, et al. Projected Impact of Mexico's Sugar-Sweetened Beverage Tax Policy on Diabetes and Cardiovascular Disease: A Modeling Study. PLoS Med. 2016;13(11
Barrientos-Gutierrez T et al. Expected population weight and diabetes impact of the 1-peso-per-litre tax to sugar sweetened beverages in Mexico. PLoS One. 2017;12(5
Employment
 Employment changes
• Interrupted Times Series Analysis

• Data: Monthly surveys by sector and quarter data on national

unemployment

• Manufacturing industry that produces beverages and taxed food (2007-2016)

• Commercial establishments selling food and beverages (2011-2015)

• Unemployment rates (2005-2016)

Figure 1. Thousands of employees in the non-alcoholic beverages and nonessential energy-dense food manufacturing industries. Mexico,

EMIM 2007-2016

Figure 1A- Sugar-sweetened beverages industy Figure 1B- Nonessential energy-dense food industry
Figure 2. Thousands of employees in commercial establishments. Mexico, EMEC,

2011-2015
Figure 3. National unemployment rate. Mexico, ENOE 2005-2016.
Revenues
 Revenues
• Cumulative revenues 2014-2016: 63,021 million pesos (3,323 million
USD)

• Revenues cannot be earmarked

• Fiscal law contemplates that some resources should be assigned to

prevention and treatment of chronic diseases but the amount is unknown

• Water fountains have been installed in about 9,000 schools but the target
is unknown
Conclusions
 Summary
• SSB prices increased (higher increase in urban areas)

• Household purchases decreased (higher reductions among the poorest

and in urban areas)

• No negative effects on employment

• High revenues were raised

 How could the SSB tax be improved?
• Annual adjustment to inflation and economic growth

• Increase the tax to get more benefits

• Feasibility of adding an additional amount to beverages with higher sugar

content (reformulation)

• Assign resources to compensate to correct externalities (availability of

water in poor areas, subsidies to healthy food)
 How could the SSB tax be improved?
• Taxes: one component of a national strategy

• Improve/evaluate current strategies to fight obesity and diabetes (marketing

to children, front of pack labelling, regulation of food and beverages offered
at schools, campaigns)

• Structural policies to modify the food system to incentivize the production

and distribution of healthier food options

• Tax evaluation: concentrate on changes in affordability and consumption.

Participants in the SSB impact evaluation
Instituto Nacional de Salud Pública University of North Carolina
Juan Rivera Barry Popkin
Arantxa Colchero Shuwen Ng
Carolina Batis Lindsey Smith Taillie
Mauricio Hernández A. Emily Yoon
Tonatiuh Barrientos Donna Miles
Anabel Velasco Kuo-ping Li
Mariana Molina Nancy López
Carlos Guerrero Tania Aburto
Mishel Unar Lilia Pedraza
Alejandro Zavala Juan Carlos Salgado
Mauricio Hernandez F

Funding: Bloomberg Philanthropies, Robert Wood Johnson Foundation

(71698), Instituto Nacional de Salud Pública, NIH R01DK10814

No conflicts of interest to declare

 SSB taxation in Mexico: the rational
and the impact on prices, household
purchases and employment

Presenter: Arantxa Colchero

Fiscal Measures to Prevent Obesity/NCDs in Jamaica: focus on Sugar-Sweetened Beverages

Kingston, Jamaica-January 11, 2018