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Sugary Drinks Taxation, Projected Consumption and Fiscal Revenues in Colombia: Evidence from a QUAIDS Model

Citation

Caro, Juan Carlos; Ng, Shu Wen; Bonilla, Ricardo; Tovar, Jorge; & Popkin, Barry M. (2017). Sugary Drinks Taxation, Projected Consumption and Fiscal Revenues in Colombia: Evidence from a QUAIDS Model. PLOS ONE, 12(12), e0189026. PMCID: PMC5737888

Abstract

The global shift towards diets high in sugar-sweetened beverages (SSBs) is linked to higher prevalence of obesity, diabetes and most other non-communicable diseases. In Colombia, one out of every two people was overweight or obese by 2010. This study estimates price-elasticities from a Quadratic Almost Ideal Demand System model, using the 2006-2007 Colombian Income and Expenditure survey. The food groups that were jointly considered were: unsweetened unflavored milks; coffee and tea; sugar sweetened beverages (SSBs); sweets and candies (including sugar); dairy products; meats and animal-based products; grains based staples; fruits and vegetables; and condiments and snacks. We take into account the high proportion of households not purchasing specific food and beverage groups (censored data) and endogeneity on both prices (as unit values) and total expenditure. Unhealthy beverages are price-elastic (-1.61 for SSBs) meaning that the change in consumption is proportionally larger with respect to a change in price. Also, there is a high complementarity among SSBs and major food groups (grains, meats and fruits and vegetables). In Colombia, the design of a meaningful tax to influence healthier diets is a next critical step. This study also shows that a tax of 20% on SSBs should prove to be effective, and can yield revenues of about 1% of the Colombian government's total annual fiscal revenue, which can potentially be directed towards public health promotion and investments.

URL

http://dx.doi.org/10.1371/journal.pone.0189026

Reference Type

Journal Article

Year Published

2017

Journal Title

PLOS ONE

Author(s)

Caro, Juan Carlos
Ng, Shu Wen
Bonilla, Ricardo
Tovar, Jorge
Popkin, Barry M.

PMCID

PMC5737888