UNC Study Predicts Outcomes of Tax on Sugar-Sweetened Beverages in Colombia

January 4, 2018

Three researchers in the University of North Carolina at Chapel Hill Gillings School of Global Public Health are co-authors of a new study that estimates what outcomes would likely result if Colombia were to institute a national tax on sugar-sweetened beverages.

Obesity and overweight prevalence have increased dramatically in Colombia in recent years, and a large body of prior research makes it clear that sugar-sweetened beverages such as sodas and fruit drinks are a major contributor to these health problems.

Colombia is not alone in this. Countries around the globe are implementing tax policies to reduce the consumption of sugar-sweetened beverages. Building on this momentum, a team of researchers estimated how purchases of sugar-sweetened beverages and other foods might change, as well as how government revenue might be affected, should similar fiscal measures be implemented in Colombia. Such taxes have been discussed in the country, but have not yet been passed.

The full article on the researchers’ findings, titled, “Sugary drinks taxation, projected consumption and fiscal revenues in Colombia: Evidence from a QUAIDS model,” was published online Dec. 20, 2017 by the journal PLOS One. Co-authors from the Gillings School include associate professor Shu Wen Ng and W. R. Kenan Jr. Distinguished Professor Barry M. Popkin, both in the Department of Nutrition, and Juan Carlos Caro, a doctoral student in the Department of Health Policy and Management.

The researchers used data from the Colombia National Income and Expenditures Survey to estimate the price elasticities of consumer demand for sugar-sweetened beverages. They projected that a 20 percent tax on sugary beverages would decrease purchases by 32 percent.

“In addition, our estimates showed that, following the tax, consumers likely would purchase grains, dairy-based products, and fruits and vegetables in place of sugary drinks,” said Popkin. “This represents a move toward healthier food choices.”

He added, “Low-income households were predicted to decrease their purchases of sugary drinks more than mid- and high-income households, which forecasts greater health benefits for lower-income Colombians.”

The researchers also used sales data from Euromonitor International to project how the predicted changes in average per capita consumption of sugar-sweetened beverages might affect potential revenue. Their models estimated that a 20 percent tax on sugary drinks would raise $480 million USD in government revenue by 2020.

“This figure represents about one percent of Colombia’s entire gross domestic product,” said Ng. “The money could be earmarked for investment in public health projects and priorities.”

Given their findings, the authors concluded that the design of a meaningful tax to influence healthier diets is a critical next step for public health in Colombia.