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Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile: A time series analysis

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Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile : A time series analysis. / Cuadrado, Cristóbal; Dunstan, Jocelyn; Silva-Illanes, Nicolas; Mirelman, Andrew J.; Nakamura, Ryota; Suhrcke, Marc.

In: Social science and medicine, Vol. 245, 112708, 01.01.2020.

Research output: Contribution to journalArticle

Harvard

Cuadrado, C, Dunstan, J, Silva-Illanes, N, Mirelman, AJ, Nakamura, R & Suhrcke, M 2020, 'Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile: A time series analysis', Social science and medicine, vol. 245, 112708. https://doi.org/10.1016/j.socscimed.2019.112708

APA

Cuadrado, C., Dunstan, J., Silva-Illanes, N., Mirelman, A. J., Nakamura, R., & Suhrcke, M. (2020). Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile: A time series analysis. Social science and medicine, 245, [112708]. https://doi.org/10.1016/j.socscimed.2019.112708

Vancouver

Cuadrado C, Dunstan J, Silva-Illanes N, Mirelman AJ, Nakamura R, Suhrcke M. Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile: A time series analysis. Social science and medicine. 2020 Jan 1;245. 112708. https://doi.org/10.1016/j.socscimed.2019.112708

Author

Cuadrado, Cristóbal ; Dunstan, Jocelyn ; Silva-Illanes, Nicolas ; Mirelman, Andrew J. ; Nakamura, Ryota ; Suhrcke, Marc. / Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile : A time series analysis. In: Social science and medicine. 2020 ; Vol. 245.

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@article{f288b4d036444da29d53ef13c92b5fef,
title = "Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile: A time series analysis",
abstract = "Chile is one of several countries that recently implemented a fiscal policy to reduce soft drink (SD) intake and obesity. In 2014 the government increased the existing ad-valorem tax on high-sugar SD by 5{\%} and decreased by 3{\%} the tax on low-sugar SD, based on a 6.25gr/100 ml sugar threshold. This study aims to evaluate the tax modification passed-on to consumers through prices, and to calculate changes in affordability of SDs. We analysed nationally representative consumer price index data of 41 soft drinks within 6 beverage categories between 2009 and 2016. Price change post-tax implementation was estimated for different categories (carbonates, juices, concentrates, waters and energy-sport drinks), using time-series analyses. In addition, changes in affordability were evaluated by estimating the changes in prices relative to wages. The price of carbonates increased by 5.60{\%} (CI 95{\%} 3.18–8.03{\%}) immediately after the tax was implemented. A sustained increase in the prices of concentrates was observed after the implementation. Unexpectedly, a smaller increase was also seen for the price of bottled water – a category that saw no tax change. There were no effects for juices and energy-sports drinks. There was a reduction in affordability for carbonates, concentrates and waters. Overall, the fiscal policy was effective in increasing prices and there are some signs of reduced affordability. Results varied substantially among categories directly affected by the tax policy. While for carbonates the price increase exceeded the tax change (‘over-shifting’), in other categories subject to a tax cut, a price reduction was expected but the opposite occurred. As the effect of the tax on prices differed between categories, the effects of the tax policy on consumption patterns are likely to be mixed. Our findings underline the need to better understand and anticipate price setting behaviour of firms in response to a tax.",
keywords = "Affordability, Chile, Fiscal policy, Price, Soda, Soft drink, Sugar-sweetened beverage, Tax, Taxation",
author = "Crist{\'o}bal Cuadrado and Jocelyn Dunstan and Nicolas Silva-Illanes and Mirelman, {Andrew J.} and Ryota Nakamura and Marc Suhrcke",
year = "2020",
month = "1",
day = "1",
doi = "10.1016/j.socscimed.2019.112708",
language = "English",
volume = "245",
journal = "Social Science & Medicine",
issn = "0277-9536",
publisher = "Elsevier Limited",

}

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TY - JOUR

T1 - Effects of a sugar-sweetened beverage tax on prices and affordability of soft drinks in Chile

T2 - A time series analysis

AU - Cuadrado, Cristóbal

AU - Dunstan, Jocelyn

AU - Silva-Illanes, Nicolas

AU - Mirelman, Andrew J.

AU - Nakamura, Ryota

AU - Suhrcke, Marc

PY - 2020/1/1

Y1 - 2020/1/1

N2 - Chile is one of several countries that recently implemented a fiscal policy to reduce soft drink (SD) intake and obesity. In 2014 the government increased the existing ad-valorem tax on high-sugar SD by 5% and decreased by 3% the tax on low-sugar SD, based on a 6.25gr/100 ml sugar threshold. This study aims to evaluate the tax modification passed-on to consumers through prices, and to calculate changes in affordability of SDs. We analysed nationally representative consumer price index data of 41 soft drinks within 6 beverage categories between 2009 and 2016. Price change post-tax implementation was estimated for different categories (carbonates, juices, concentrates, waters and energy-sport drinks), using time-series analyses. In addition, changes in affordability were evaluated by estimating the changes in prices relative to wages. The price of carbonates increased by 5.60% (CI 95% 3.18–8.03%) immediately after the tax was implemented. A sustained increase in the prices of concentrates was observed after the implementation. Unexpectedly, a smaller increase was also seen for the price of bottled water – a category that saw no tax change. There were no effects for juices and energy-sports drinks. There was a reduction in affordability for carbonates, concentrates and waters. Overall, the fiscal policy was effective in increasing prices and there are some signs of reduced affordability. Results varied substantially among categories directly affected by the tax policy. While for carbonates the price increase exceeded the tax change (‘over-shifting’), in other categories subject to a tax cut, a price reduction was expected but the opposite occurred. As the effect of the tax on prices differed between categories, the effects of the tax policy on consumption patterns are likely to be mixed. Our findings underline the need to better understand and anticipate price setting behaviour of firms in response to a tax.

AB - Chile is one of several countries that recently implemented a fiscal policy to reduce soft drink (SD) intake and obesity. In 2014 the government increased the existing ad-valorem tax on high-sugar SD by 5% and decreased by 3% the tax on low-sugar SD, based on a 6.25gr/100 ml sugar threshold. This study aims to evaluate the tax modification passed-on to consumers through prices, and to calculate changes in affordability of SDs. We analysed nationally representative consumer price index data of 41 soft drinks within 6 beverage categories between 2009 and 2016. Price change post-tax implementation was estimated for different categories (carbonates, juices, concentrates, waters and energy-sport drinks), using time-series analyses. In addition, changes in affordability were evaluated by estimating the changes in prices relative to wages. The price of carbonates increased by 5.60% (CI 95% 3.18–8.03%) immediately after the tax was implemented. A sustained increase in the prices of concentrates was observed after the implementation. Unexpectedly, a smaller increase was also seen for the price of bottled water – a category that saw no tax change. There were no effects for juices and energy-sports drinks. There was a reduction in affordability for carbonates, concentrates and waters. Overall, the fiscal policy was effective in increasing prices and there are some signs of reduced affordability. Results varied substantially among categories directly affected by the tax policy. While for carbonates the price increase exceeded the tax change (‘over-shifting’), in other categories subject to a tax cut, a price reduction was expected but the opposite occurred. As the effect of the tax on prices differed between categories, the effects of the tax policy on consumption patterns are likely to be mixed. Our findings underline the need to better understand and anticipate price setting behaviour of firms in response to a tax.

KW - Affordability

KW - Chile

KW - Fiscal policy

KW - Price

KW - Soda

KW - Soft drink

KW - Sugar-sweetened beverage

KW - Tax

KW - Taxation

UR - http://www.scopus.com/inward/record.url?scp=85076425706&partnerID=8YFLogxK

U2 - 10.1016/j.socscimed.2019.112708

DO - 10.1016/j.socscimed.2019.112708

M3 - Article

C2 - 31862547

AN - SCOPUS:85076425706

VL - 245

JO - Social Science & Medicine

JF - Social Science & Medicine

SN - 0277-9536

M1 - 112708

ER -