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Sugar-Sweetened Beverage Taxation in the Region of the Americas Sugar-sweetened beverage taxation in the Region of the Americas Sugar-sweetened beverage taxation in the Region of the Americas Washington, D.C., 2020 Sugar-sweetened beverage taxation in the Region of the Americas © Pan American Health Organization, 2020 ISBN: 978-92-75-12299-0 (Print) ISBN: 978-92-75-12300-3 (PDF) Some rights reserved. This work is available under the Creative Commons Attribution-NonCommercial-ShareAli- ke 3.0 IGO license (CC BY-NC-SA 3.0 IGO; https://creativecommons.org/licenses/by-nc-sa/3.0/igo). Under the terms of this license, this work may be copied, redistributed, and adapted for non-commercial purpo- ses, provided the new work is issued using the same or equivalent Creative Commons license and it is appro- priately cited, as indicated below. In any use of this work, there should be no suggestion that the Pan American Health Organization (PAHO) endorses any specific organization, product, or service. Use of the PAHO logo is not permitted. Adaptations: If this work is adapted, the following disclaimer should be added along with the suggested citation: “This is an adaptation of an original work by the Pan American Health Organization (PAHO). Views and opinions expressed in the adaptation are the sole responsibility of the author(s) of the adaptation and are not endorsed by PAHO.” Translation: If this work is translated, the following disclaimer should be added along with the suggested cita- tion: “This translation was not created by the Pan American Health Organization (PAHO). PAHO is not responsi- ble for the content or accuracy of this translation.” Suggested citation. Sugar-sweetened beverage taxation in the Region of the Americas. Washington, D.C.: Pan American Health Organization; 2020. License: CC BY-NC-SA 3.0 IGO. 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The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of PAHO concerning the legal status of any country, territory, city, or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dotted and dashed lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of specific companies or of certain manufacturers’ products does not imply that they are endorsed or recommended by PAHO in preference to others of a similar nature that are not mentioned. Errors and omis- sions excepted, the names of proprietary products are distinguished by initial capital letters. All reasonable precautions have been taken by PAHO to verify the information contained in this publication. However, the published material is being distributed without warranty of any kind, either expressed or implied. The responsibility for the interpretation and use of the material lies with the reader. In no event shall PAHO be liable for damages arising from its use. NMH/MH/2020 Contents Preface iv Acknowledgments v Acronyms and abbreviations vi Introduction 1 1. Economic concepts 4 1.1 Economic rationale for sugar-sweetened beverage (SSB) taxes 4 1.2 Economic costs of obesity. 4 2. Key elements for SSB tax design and implementation 7 2.1 Tax type and structure 7 2.2 Tax base 10 2.3 Tax rate 14 2.4 Current SSB taxes in the Americas 15 3. Tax revenue and earmarking 17 3.1 Revenue generation 17 3.2 Earmarking 19 4. Evidence on the impact of SSB taxes 20 4.1 Impact on SSB prices 20 4.2 Impact on demand for SSBs 22 4.3 Impact on substitution 24 5. Frequent questions and responses about economic impacts of SSB taxation 28 5.1 Distributional impact of SSB taxes 29 5.2 Cross-border shopping 29 5.3 Impact on employment 30 6. Conclusions 32 7. References 33 Appendix A: Characteristics of sweetened beverage taxes: Examples from eight local-level taxes in the United States 40 Appendix B: Impact of sweetened beverage excise taxes on beverage volume sold, sales, purchases, and consumption in the Americas based on evaluation studies published from January 2015 to March 2020, by tax jurisdiction 44 iv Preface As policymakers consider taxation of sugar-sweetened beverages (SSBs) as a policy tool to reduce SSB consumption and reduce health risks related to such consumption, the documentation and exchange of experiences and evidence accumulated becomes paramount. Taxation of sugar-sweetened beverages has been implemented in more than 73 countries worldwide. In the Region of the Americas, 21 PAHO/WHO Member States apply national-level excise taxes on SSBs and seven jurisdictions apply local SSB taxes in the United States of America. While the number of countries applying national excise taxes on SSBs in the Region is promising, some of these taxes have been implemented to increase tax revenue, without considering their role as a health policy instrument. Most of these taxes could be further leveraged to improve their impact on SSB consumption and health. This publication provides readers with economic concepts related to the economic rationale for using SSB taxes and the costs associated with obesity; key considerations on tax design including tax types, bases, and rates; an overview of potential tax revenue and earmarking; evidence on the extent to which these taxes are expected to impact prices of taxed beverages, the demand for taxed beverages, and substitution to untaxed beverages; and responses to frequent questions about the economic impacts of SSB taxation. Sugar-sweetened beverage taxation in the Region of the Americas v Acknowledgments The Pan American Health Organization (PAHO) gratefully acknowledges the following contributions: Lisa Powell (University of Illinois at Chicago, USA), Fabio Gomes, Rosa Sandoval, Maxime Roche and Steven Constantinou (PAHO/WHO) contributed to the conception and design of the work; to the acquisition, analysis and interpretation of data for the work; and, to the drafting of the work and critical revision for important intellectual content. Keith Marple (Brandeis University, USA) and Tatiana Andreyeva (University of Connecticut, USA) contributed to the acquisition and analysis of data for the work. This report was reviewed by Guillermo Paraje (University Adolfo Ibanez, Chile); Arantxa Colchero (National Institute of Public Health, Mexico); Chizuru Nishida, Evan Blecher, Jeremias Paul, Jr., Katrin Engelhardt, and Roberto Iglesias (WHO). PAHO also acknowledges the support from the Global Health Advocacy Incubator and funding from Bloomberg Philanthropies. vi Sugar-sweetened beverage taxation in the Region of the Americas Acronyms and abbreviations CU Currency units CVD Cardiovascular diseases GST General sales taxes NCD Noncommunicable disease NUGAG Nutrition Guidance Expert Advisory Group PAHO Pan American Health Organization SDIL Soft drink industry levy SES Socioeconomic status SSB Sugar-sweetened beverage UPC Universal Product Codes VAT Value added taxes WHO World Health Organization 1 Introduction Noncommunicable diseases (NCDs) lead to morbidity and premature mortality worldwide and the burden of NCDs is a major challenge for social and economic development. The five principal NCDs are cardiovascular diseases (CVD), cancers, chronic respiratory diseases, diabetes, and mental and neurological conditions. These NCDs have five shared risk factors: tobacco use, harmful use of alcohol, air pollution, unhealthy diet, and physical inactivity. In the Region of the Americas, NCDs were responsible for an estimated 5.55 million deaths (80.7% of all deaths) in 2016. Thirty-nine percent of these NCD- related deaths occurred prematurely in persons aged 30 to 69 years. CVD is the leading cause of NCD mortality, accounting for 28% of all NCD deaths (1). Worldwide, the cost of the five principal NCDs has been estimated at US$ 47 trillion over the period 2011-2030 (2). Over the past few decades, obesity/overweight and related NCDs have progressively increased in every age group and have become the major cause of death and disability in the Region of the Americas (55% of all causes in 2012), according to WHO Global Health Estimates (3). The growing problem of NCDs is occurring in tandem with several nutritional deficiencies (e.g., low intake of iron, zinc, vitamin A, folate, and other micronutrients) which result from poverty and unhealthy diets and remain significant in several areas in the Americas, including the Andean, Central American, and Caribbean sub-regions. 2 Sugar-sweetened beverage taxation in the Region of the Americas The prevalence of adult overweight and obesity has increased substantially over the last 20 years in the Region of the Americas (63.7% for males and 61.0% for females, in 2016). The highest prevalence rates are the United States of America (68%), Mexico (65%), Canada (64%), and the Bahamas (64%) (4). Prevalence rates have grown among children and adolescents and available data show that 20% to 25% are overweight or obese (5). Scientific knowledge about the influence of specific dietary intake patterns on the development of obesity/overweight and other NCDs is fairly robust (6, 7). In particular, sugar-sweetened beverage (SSB) consumption is linked to obesity, and is independently related to adverse health outcomes including type 2 diabetes, cardiovascular disease, dental caries, and osteoporosis (8, 9, 10, 11). There is growing evidence of the importance of taxes on SSBs as part of a comprehensive approach to reducing SSB consumption.
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