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

Motivation

The consumption of sugar-sweetened beverages (SSBs) is an important driver of the obesity epidemic and of other diet-related noncommunicable diseases (NCDs) in the Region of the Americas. Indeed, SSB consumption in Latin America and the Caribbean (LAC) is estimated to be of amongst the highest levels in the world, and diet related NCDs are a leading cause of death and disability in the Region.

Effective taxation on health-harming products such as SSBs can play an important role in reducing consumption of these products and related health risks. SSB taxes have been identified by the World Health Organization (WHO) in its Global Action Plan for the Prevention and Control of NCDs 2013-2020 as a cost-effective, evidence-based policy to reduce the level of exposure of individuals and populations to unhealthy diets. SSB taxes are increasingly applied across LAC (in 21 countries as of 2019), and represent a triple win for governments because they have the potential to 1) improve population health by reducing consumption of unhealthy products, 2) generate additional tax revenue, and 3) have the potential to reduce long-term associated health care costs and productivity losses.

In order to optimize the use of SSB taxes from a public health perspective, it is critical to have a clear and comparable picture of existing SSB tax designs, tax levels and prices. In the case of tobacco taxes, this is enabled through robust and consistent monitoring done by the WHO since 2008, producing periodic, standardized indicators on tax price, level, and affordability. Such monitoring has proven essential for analyzing trends, enabling standardized comparisons across countries, establishing best practices, and providing a powerful tool for advocacy.  Similar work does not exist at the global level (and previously did not exist at the regional level), for SSB taxes.

Institutional Effort

The Pan American Health Organization (PAHO) is committed to providing Member States with accurate, relevant, and internationally comparable information that they can use to guide the development of policy and to evaluate the impact of measures to prevent diet-related NCDs. As such, the Economics of NCDs team at PAHO has been working since 2016 to address the gap on measuring progress on SSB taxation in the Americas. In a pioneer effort, the team developed a methodology for estimating a tax share indicator and other tax policy and price indicators for selected non-alcoholic beverages, based on the methodology used by WHO to monitor prices and taxes applied on tobacco products. The development of this methodology required adaptation to the unique characteristics of SSBs (which are far more diverse in terms of their product types, volume sizes, and levels of sugar-content). The adapted methodology was validated with global specialists and published in 2021, outlining the definition of the scope of beverages for which the tax share should be calculated; a description of the data collection and analysis process; and an explanation of key components of the tax share calculation. It also defines additional indicators on prices, affordability, and tax structure and administration. The team also published an overview characterizing the design of existing excise taxes on SSBs in Latin America and the Caribbean.  

Following up on this work, this recent Lancet publication presents the first region-wide estimation of a standardized and comparable metric of tax levels applied on non-alcoholic beverages, aiming to compare the novel standardized indicators across SSB categories in Latin America and the Caribbean.

This publication finds that excise tax levels are generally low in the region. From a public health perspective, tax rates could be increased, and tax designs improved (e.g., excluding bottled waters). Finally, the method used provides a feasible and informative way to monitor SSB taxation and could be replicated at the global level in other regions and over time.

Agenda