7A.2 Examples of different tax designs and evidence on their effectiveness

TABLE 7A.1, continued

EXAMPLES OF SITES WITH EXCISE TAXES BRIEF DESCRIPTION OF TAX

PRICE CHANGE

VOLUME SALES OR PURCHASES CHANGE OF TAXED PRODUCTS INTAKE

CHANGE OF TAXED PRODUCTS OTHER CHANGES REVENUE USE OTHER GAPS IN KNOWLEDGE

South Africa (since April 2018) 0.021 South African rand per gram of sugar in 100 milliliters of ready-to-drink SSBs above 4 g sugar excise tax. ↑ ↓ ↓ ↓ Sugar and calories General budget (small percent given to Department of Health) Impact of reformulations with artificially sweeteners unknown.

Source: Original table for this publication. Note: ↓ decrease; ↔ no effect; ↑ increase. NCDs = noncommunicable diseases; SSB = sugar-sweetened beverages; kcals = kilocalories; TBD = to be determined from ongoing research studies.

TABLE 7A.2 Examples of different tax designs and evidence on their effectiveness

TYPE OF TAX COUNTRY EXAMPLE EVIDENCE

Volume-based tax Philadelphia, PA, United States implemented a US$0.02 per ounce tax on SSBs. Lowered taxed beverage purchases by 38 percent with no negative impact on employment.

Sugar-contentbased tax Mexico implemented 1 peso per liter on all SSBs.

South Africa announced charging about a tenth of a US$0.01 per gram of added sugar. Overall, there was a 12 percent decrease in taxed beverage purchases posttax and a 4 percent increase in the purchases of unflavored bottled water compared to the counterfactual predicted beverage purchases without the tax.

Not available yet.

Tiered tax structure (different rates based on sugar content)

Ad valorem tax (based on retail price) United Kingdom implemented a higher tax rate of 24 pence on drinks containing 8 grams of sugar per 100 milliliters and a lower tax of 18 pence on those with 5–8 grams of sugar per 100 milliliters. GCC countries adopted a 50 percent tax on carbonated drinks and 100 percent tax on energy drinks. The drinks over the lower tax sugar threshold had fallen by 33.8 percentage points. Coca-Cola and Nestle have changed the formula for some soda products (Fanta has 24 percent less sugar).

Sales declined by 35 percent in Saudi Arabia compared to GCC countries without the tax.

Source: Original table for this publication. Note: GCC = Gulf Cooperation Council; SSBs = sugar-sweetened beverages. CONSIDERATIONS

• Provides stable revenues, easier to administer • Must be adjusted to inflation to avoid erosion over time • Does not account for variations in sugar content • Does not encourage industry reformulation

• Easier for consumers to understand because it directly links amount of sugar to negative health outcomes • Encourages industry reformulation • Requires strong tax administration system • Encourages industry reformulation • Requires strong tax administration system

• Easy to administer • Accounts for inflation • Potential for industry pricing manipulation • No incentive for reformulation • Not easy for consumers to understand