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The effect of a soft-drink tax in Mexico: a time series approach

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  • Arteaga, Julio Cesar
  • Flores, Daniel
  • Luna, Edgar

Abstract

We use a time series approach and industry data to estimate the effect on consumption of an excise tax on soft drinks imposed recently in Mexico. The tax caused a price increase of 12.8% and reduced per-capita consumption about 3.8%. This effect is small in comparison to the effects suggested by most studies that have estimated price elasticities using an almost-ideal-demand-system and household survey data.

Suggested Citation

  • Arteaga, Julio Cesar & Flores, Daniel & Luna, Edgar, 2017. "The effect of a soft-drink tax in Mexico: a time series approach," MPRA Paper 80831, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:80831
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    Cited by:

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    2. Dickson, Alex & Gehrsitz, Markus & Kemp, Jonathan, 2022. "Does a Spoonful of Sugar Levy Help the Calories Go Down? An Analysis of the UK Soft Drinks Industry Levy," VfS Annual Conference 2022 (Basel): Big Data in Economics 264048, Verein für Socialpolitik / German Economic Association.
    3. Goncalves, Judite & Merenda, Roxanne & Pereira dos Santos, João, 2023. "Not So Sweet: Impacts of a Soda Tax on Producers," IZA Discussion Papers 15968, Institute of Labor Economics (IZA).
    4. Law, Cherry & Cornelsen, Laura & Adams, Jean & Pell, David & Rutter, Harry & White, Martin & Smith, Richard, 2020. "The impact of UK soft drinks industry levy on manufacturers’ domestic turnover," Economics & Human Biology, Elsevier, vol. 37(C).
    5. Goncalves, Judite & Merenda, Roxanne & dos Santos, João Pereira, 2022. "Not so sweet: The impact of the Portuguese soda tax on producers," Ruhr Economic Papers 938, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    6. Andalón, Mabel & Gibson, John, 2018. "The ‘soda tax’ is unlikely to make Mexicans lighter or healthier: New evidence on biases in elasticities of demand for soda," MPRA Paper 86370, University Library of Munich, Germany.
    7. Gonçalves, Judite & Pereira dos Santos, João, 2020. "Brown sugar, how come you taste so good? The impact of a soda tax on prices and consumption," Social Science & Medicine, Elsevier, vol. 264(C).
    8. Nuño Ledesma José G. & Wu Steven Y. & Balagtas Joseph V., 2022. "Nonlinear Pricing Under Regulation: Comparing Cap Rules and Taxes in the Laboratory," Working Papers 2022-10, Banco de México.

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    More about this item

    Keywords

    Soft drinks; Tax; Time series;
    All these keywords.

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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