Chile’s 2014 sugar-sweetened beverage tax and changes in prices and purchases of sugar-sweetened beverages: An observational study in an urban environment

Abstract

Background

On October 1, 2014, the Chilean government modified its previous sugar-sweetened beverage (SSB) tax, increasing the tax rate from 13% to 18% on industrialized beverages with high levels of sugar (H-SSBs) (greater than 6.25 grams [g] sugar/100 milliliters [mL]) and decreasing the tax rate from 13% to 10% on industrialized beverages with low or no sugar (L-SSBs) (less than 6.25 g sugar/100 mL). This study examines changes in beverage prices and household beverage purchases following the implementation of the tax reform.

Methods and findings

We used longitudinal data collected between January 1, 2013, and December 31, 2015, from 2,000 households. We defined the pretax period as January 1, 2013, to September 30, 2014, and the posttax period as October 1, 2014, to December 31, 2015. We conducted a pre–post analysis for changes in prices and purchases, with the latter examined by volume and calories. We compared posttax changes in prices and purchases to a counterfactual, defined as what would have been expected in the posttax period based on pretax trends. All results are stated as comparisons to this counterfactual. We linked beverages at the bar code level to nutrition facts panel data collected by a team of Chilean nutritionists who categorized them by taxation level and beverage subcategory, which included carbonated and noncarbonated H-SSBs and concentrated, ready-to-drink L-SSBs and untaxed beverages. We reconstituted concentrated beverages and analyzed all beverages using as-consumed volumes and calories. Posttax monthly prices of H-SSBs increased, but these changes were small. Prices of carbonated H-SSBs increased by 2.0% (95% confidence interval [CI] 1.0%–3.0%), while those of noncarbonated H-SSBs increased by 3.9% (95% CI 1.6%–6.2%). Prices of L-SSB concentrates decreased after the tax by 6.7% (95% CI −8.2%–−4.6%), and prices of ready-to-drink L-SSBs increased by 1.5% (95% CI 0.3%–2.7%). Households decreased monthly per capita purchases of H-SSBs by 3.4% by volume (95% CI −5.9%–−0.9%) and 4.0% by calories (95% CI −6.3%–−1.9%), and this change was greater among high socioeconomic status (SES) households. The volume of household purchases of L-SSBs increased 10.7% (95% CI 7.5%–13.9%), while that of untaxed beverage purchases decreased by 3.1% (95% CI −5.1%–−1.1%). The main limitation of this study was that there was no control group, so we were unable to assess the causal impact of the tax.

Conclusions

The modifications of Chile’s SSB tax were small, and observed changes in prices and purchases of beverages after the tax were also small. Our results are consistent with previous evidence indicating that small increases in SSB taxes are unlikely to promote large enough changes in SSB purchases to reduce obesity and noncommunicable diseases (NCDs).

Abstract

Lindsey Smith Taillie and colleagues describe reduced purchases of sugar-sweetened beverages after modifications to the Chilean sugar tax.

Author summary

Why was this study done?

• Sugar-sweetened beverage (SSB) taxes have emerged as a strategy to prevent a continued rise in obesity prevalence and noncommunicable diseases (NCDs).

• Recent studies in Mexico and the United States have shown that SSB taxes are associated with increased prices of taxed beverages and reduced purchases of those beverages, particularly among households of low socioeconomic status (SES).

• Little evidence exists on the effects increasing or decreasing an existing SSB tax has on beverage prices and purchases.

• On October 1, 2014, Chile increased its tax on industrialized beverages with high levels of sugar (H-SSBs) from 13% to 18% and reduced its tax on industrialized beverages with low or no sugar (L-SSBs) from 13% to 10%. Beverages such as plain and flavored milk, 100% fruit juices, and unflavored water remained untaxed.

• Understanding the effects of changes to existing SSB taxes is critical for informing future SSB tax policy.

What did the researchers do and find?

• We used a pre–post design to estimate changes in prices and purchases (volumes and calories) of beverages in Chile after the October 1, 2014, modifications of SSB taxes with data collected from January 1, 2013, to December 31, 2015. We compared observed posttax changes in beverage prices and purchases to the counterfactual, or what would have been expected in the posttax period based on pretax trends. All results are stated in terms of a comparison to this counterfactual.

• Our model links household beverage purchase data to nutrition facts panel data using bar code information to classify each beverage purchased by tax level and subcategory.

• We found that after the tax increase on H-SSBs, prices of H-SSBs increased, although the increases were small. In contrast, after the tax decrease on L-SSBs, prices decreased in some categories but increased in others. Prices of untaxed beverages also increased.

• After the tax increase on H-SSBs, purchases of H-SSBs decreased, although the declines were small. After the tax decrease on L-SSBs, purchases of L-SSBs increased. Despite no change in the tax rate, purchases of untaxed beverages decreased.

• High-SES households showed larger declines in purchases of H-SSBs after the tax than did low-SES households.

What do these findings mean?

• After a small increase in the tax rate on H-SSBs, changes in prices and purchases of these beverages were small. This is consistent with previous evidence indicating that small increases in SSB taxes are unlikely to produce large changes in SSB purchases. Further evidence is needed to understand the small change in prices due to the tax reform.

• High-SES households showed larger declines in purchases of H-SSBs than did low-SES households. Further research is needed to understand the differential response to this tax by SES.

• After a decrease in the tax rate on L-SSBs, purchases of these beverages increased a large amount. Further research is needed to understand the health consequences of the shift toward these beverages, which frequently contain artificial sweeteners.