Excise taxes on sugar-sweetened beverages in Latin America and the Caribbean

Abstract

Objective. To characterize the design of excise taxes on sugar-sweetened beverages (SSBs) in Latin America and the Caribbean and assess opportunities to increase their impact on SSB consumption and health. Methods. A comprehensive search and review of the legislation in effect as of March 2019, collected through existing Pan American Health Organization and World Health Organization monitoring tools, secondary sources, and surveying ministries of finance. The analysis focused on the type of products taxed, and the structure and base of these excise taxes. Results. Out of the 33 countries analyzed, 21 apply excise taxes on SSBs. Seven countries also apply excise taxes on bottled water and at least four include sugar-sweetened milk drinks. Ten of these excise taxes are ad valorem with some tax bases set early in the value chain, seven are amount-specific, and four have either a combined or mixed structure. Three countries apply excise taxes based on sugar concentration. Conclusions. While the number of countries applying excise taxes on SSBs is promising, there is great heterogeneity in design in terms of structure, tax base, and products taxed. Existing excise taxes could be further leveraged to improve their impact on SSB consumption and health by including all categories of SSBs, excluding bottled water, and relying more on amount-specific taxes regularly adjusted for inflation and possibly based on sugar concentration. All countries would benefit from additional guidance. Future research should aim to address this gap.

Progress in the Pacific on sugar‐sweetened beverage taxes: a systematic review of policy changes from 2000 to 2019

“…Three‐quarters of the 21 PICTs had an SSB tax in 2019, and 11 of 16 had taxes (excise and tariffs) on both imported and locally produced beverages. The proportion of jurisdictions (11/21) with excise taxes in the Pacific was similar to the Caribbean (6/13), but SSB excises are reported to be slightly more common in Latin America (15/19) 25 . The level of SSB taxes was greater than 50% (of import value) in seven Pacific jurisdictions, greater than 20% in 14 jurisdictions and less than 20% in two jurisdictions.…”

“…As seen in the Caribbean and Latin America, the design of many SSB taxes in the Pacific has not been optimised to reduce SSB consumption and there is an opportunity for further design improvements to achieve health goals 25 . Most SSB taxes were ad valorem or volumetric tax designs.…”

“…Many SSB taxes targeted a narrow set of SSB types, for example, soft drinks alone, as seen in the Caribbean and Latin America 25 . Tonga 22 and French Polynesia 23 both included sugar‐sweetened fruit juice, which is likely to reduce the risk of tax erosion from substitution to this beverage.…”

Comparing taxes as a percentage of sugar-sweetened beverage prices in Latin America and the Caribbean

“…For tax information, we cross-checked the collected legislation with results from Sandoval et al.’s review of excise taxes on SSBs in LAC. 20 For other indirect taxes, we reviewed legislation already collected through existing PAHO and WHO monitoring tools, including the WHO Global Nutrition Policy Review, the WHO Report on the Global Tobacco Epidemic, the WHO Global Information System on Alcohol and Health, and the PAHO NCD Country Capacity Survey, and conducted searches on websites of parliaments, ministries of finance, and legal databases. The data presented are based on legislation in effect as of 31 March 2019.…”

“…Many are not optimized to achieve health goals. 20 Given heterogeneity in tax design, how can we monitor and compare tax levels applied on SSBs across countries and time as well as between beverage categories? It is not straightforward to compare, for example, Mexico's 1 peso per liter tax with the 10% tax applied in Barbados, nor to tease apart tax effects across beverage categories of varied sugar content and volume sizes.…”