Politics, Business & Culture in the Americas

Mexico’s ‘soda tax’ leads families to cut back

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Nearly a year after former Mayor Michael Bloomberg’s anti-soda efforts fell flat in New York City, makers of sugary beverages still have plenty to worry about. In March, the first so-called soda tax in the U.S. went into effect in Berkeley, California, earning the city $116,000 in the first month alone. Legislation to tax sweetened beverages is reportedly coursing its way through statehouses in Connecticut, Illinois, Vermont and Hawaii. And while San Francisco voters rejected a soda tax in November, earlier this month the city’s Board of Supervisors approved measures restricting soda advertising and barring the use of city funds to purchase sweetened drinks.

The latest bit of bad news (for soda makers) comes out of Mexico, which passed the world’s first soda tax in late 2013. According to a study released by the University of North Carolina and the Mexican National Public Health Institute (INSP), the nation’s one peso per liter tax on sodas caused an average decline in purchases of 6 percent over the course of 2014.

Contrary to earlier suggestions by Mexican bottling giant Coca-Cola FEMSA that the tax’s effect had waned over the course of the year, the report found that the decline in sales had accelerated over time. The tax especially influenced the country’s poorer households, which cut purchases of sugary drinks by an average of 9 percent.

The numbers appear to confirm earlier predictions of the tax’s effect. Mike Rayner, Principal Investigator with the Oxford Martin Program on the Future of Food at Oxford University, recently told The Guardian, “My immediate reaction is that it is great that it is actually working, because we need more examples of this sort of evaluation of actual taxes to confirm what we know from the modelling about these taxes.”

Mexico’s soda tax was the product of a drawn out campaign by the Alianza por la Salud Alimentaria (Nutritional Health Alliance), a highly organized coalition of public health, agrarian and consumer organizations, and significant financial support from former Mayor Bloomberg’s philanthropic organization. “They did a great job of framing the issues and working with government, health and research groups to commit to the idea that drinking less soda would be good for health, and that the money raised from the tax would be used for health purposes—clean water in schools, for example,” Marion Nestle, Paulette Goddard Professor of Nutrition and Food Studies at New York University, told AQ.

Despite the tax’s apparent success, the government appears to have fallen down on its promise to use the revenue for public health initiatives, including water fountains in schools and other public spaces. “[T]he advocacy coalition has a lot more work to do,” says Dr. Nestle. “Experience in the U.S. indicates that voters will go for a soda tax if the revenues are earmarked for health purposes. In the case of Mexico, the government apparently lied about how the funds would be used.”

Tags: Economic Policy, Health policy, Mexico
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