The Mexican government is set to become the latest to attempt to stem the tide of rising obesity through a tax on high-calorie foods and sugary drinks following a landmark decision by the Mexican Senate last week. Ben Cooper reports.
The efficacy of nutrient taxes as a means of addressing obesity is set to be tested once more with news last week that the Mexican Senate has approved an 8% tax on high-calorie foods, along with a levy of a peso per litre on sugar-sweetened drinks.
The tax is part of President Enrique Peña Nieto’s National Strategy for the Prevention and Control of Overweight, Obesity and Diabetes, a raft of measures he is putting in place to tackle the nation’s chronic obesity problem, which notably includes plans to ban junk food advertising from children’s TV programming.
President Nieto’s drive to address Mexico’s obesity epidemic – according to a recent UN Food and Agriculture Organization (FAO) report 32.8% of adult Mexicans are obese – has been welcomed by consumer advocacy group, El Poder del Consumidor (EPC), which has been campaigning for many years for a tougher regulatory response to the obesity problem.
EPC director Alejandro Calvillo said the price increase the tax would bring would make people “think twice” about eating or drinking high-calorie products. “There is a lot of junk food that the population wouldn’t recognise as junk food. Now that they will be taxed, it puts people more on alert,” he told just-food.
Calvillo welcomed President Nieto’s preparedness to use regulatory measures to address the obesity problem. “It is the most that’s been done for obesity, coming from Presidency,” he said.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
The previous two Presidents had introduced no measures, Calvillo said. “To the contrary, they allowed industry to grow and have no regulation whatsoever. If regulatory measures had been taken more than 20 years ago, the problem wouldn’t have grown as much as it did.
“Regulation is not the only measure, but it is the most important,” he said, adding that regulation must be accompanied by “appropriate education”.
Not surprisingly, food and drinks manufacturers were less enthusiastic. PepsiCo issued the following statement: “PepsiCo understands the budget challenges governments face. However, a tax on any single food or beverage category is regressive and hits low-income consumers hardest.”
The Mexican Council for the Consumer Products Industry (ConMéxico) also condemned the tax for being regressive and lacking scientific validity. The organisation said the tax represented “a manifest attack on free enterprise” and “clear discriminatory treatment” of those product categories affected.
Citing estimates from the Mexican National Institute of Public Health (Instituto Nacional de Salud Pública – INSP), the EPC said it expected the tax to reduce soda consumption from an average of 163 litres per year to 141 litres per year, and that “the impact will be greater among heavier soda consumers”.
However, Professor Richard Tiffin, director of the Centre for Food Security at Reading University, who has conducted extensive research modelling the effects of nutrient taxes including a study published just last week in the British Medical Journal (BMJ), has concluded that nutrient taxes will not produce significant changes in the dietary behaviour of at-risk consumers, and are therefore an ineffective means of reducing obesity rates.
“When you put a tax on something what happens is that people change their consumption habits marginally,” Professor Tiffin told just-food. “It’s a blunt instrument that affects everybody in the population and it just produces a slight reduction in the obesity rates. What happens is that people who are obese become slightly less obese and people who are overweight become slightly less overweight but you don’t cure the obesity problem by marginal changes in people’s diets.”
Professor Tiffin also echoed the industry criticism that such taxes are regressive. “Any tax on a food is regressive because food is a larger proportion of low-income households’ budgets, and so they bear a disproportionate amount of tax.”
It should be borne in mind, however, that taxation is just one element in President Nieto’s broader strategy to combat obesity. Targeted measures, such as addressing advertising, are “closer to the kinds of things we need”, Professor Tiffin said. He also stressed that his conclusions should not be used to support the “natural response” of business to allow the market to resolve matters. “I think clearly there is a market failure in this area and it requires some kind of government intervention to correct that market failure.”
In addition to the planned ban on advertising unhealthy foods during children’s TV, the Nieto strategy also includes the development of better labelling to identify healthier foods and new regulations for food and drinks consumed in schools, measures also welcomed by the EPC.
The EPC also applauded the earmarking of revenues from the new tax for interventions to combat obesity and diabetes and to install water fountains in schools.
Such hypothecation of nutrient taxes can make them more politically palatable but Professor Tiffin also expressed reservations about this part of the strategy. While there is “reasonable justification” for hypothecation on a superficial level, “the problem is it only begins to scratch the surface in terms of the cost to the economy”.
Underlining this point, in his most recent paper Professor Tiffin states that a 20% tax on sugar-sweetened beverages in the UK would raise GBP275m but the cost of obesity to the National Health Service is estimated to be around GBP7bn.
In the same paper, Professor Tiffin shows that increasing the price of sugar-sweetened drinks by 20% would lower consumption by around 15%, which would eliminate enough calories from the diets of 180,000 people for them no longer to be classified as obese. However, while he says 180,000 “sounds like a lot of people”, it only represents 1.3% of the millions of obese people in the UK, and is “not enough” to justify the policy.
Moreover, while 20% may be viewed by some experts as a potentially effective level to pitch such a tax, such a high percentage would be seen by policymakers as a “no-go” politically, Professor Tiffin added.
Even modest levels of nutrient taxation are clearly challenging politically and the policy has therefore been sparingly tried. The Danish government was notably forced to retreat from its saturated fat tax last year and attempts by local authorities in the US to introduce soda taxes have foundered. Just this week, the ski resort of Telluride in Colorado voted overwhelmingly to reject a proposed tax on sugar-sweetened drinks. So it is notable when such a tax receives official sanction, and does at least provide an opportunity to judge the policy in practice.
The Mexican tax would only have needed to receive official Presidential assent to become law but as the Senate approved a higher tax of 8%, rather than the 5% backed by Mexico’s lower house, it will now have to return to the lower house for approval.
President Nieto’s other planned measures also seem likely to be realised. The ban on advertising in children’s programming is scheduled to go through by Presidential decree next year, and the EPC is confident that this is a plan for action to address a chronic problem rather than bold intention or political rhetoric.
Even if doubts remain about the effectiveness of nutrient taxes alone in changing harmful consumption habits, the next few years in Mexico may shed light on whether they can be effective as part of a multi-stranded strategy to address obesity.