• From Coca-Cola to Don Simón Juices: these are the sugary drinks with increased VAT

The

increase in VAT from 10% to 21%

for

sugary and sweetened beverages

that the Government approved in

2021

with the "objective of combating childhood obesity and associated diseases such as diabetes" has only achieved a

reduction in consumption

in its first year due to part of

households with the lowest level of income

and this cut has been only

13%.

This is clear from the report published this Wednesday by

EsadeEcPol, a

think tank

led by Toni Roldán, which is the first to address the repercussions of the VAT increase on these beverages on consumer behavior.

"We have documented that the policy

had a significant and negative impact

on the

consumption of soft drinks

in a portion of the

households with the least economic capacity,

" she underlined.

The first conclusion drawn from his analysis is that

96% of the VAT increase ended up being transferred to the final price

.

It is logical that companies want to maintain their profit margin and do not change their price without VAT, so it is expected that this type of measure will discourage consumption.

Specifically, the VAT increase studied made soft drinks more expensive by

12 cents per liter

and did so from

January

and, to a lesser extent, February, with which companies did not anticipate the measure.

The rise in prices of these products

only had an effect

on the consumption of

households with a lower income level,

which are more sensitive to price, while households with medium and high incomes continued to consume the same amount of sugary and sweetened beverages .

The Government's objective

of reducing consumption was only achieved for families with lower incomes, but in a very small proportion.

Within the poorest households,

only 33% reduced consumption

and the

average drop in consumption was 13%

.

For higher income levels, the impact was not significant.

In addition to reducing obesity in general, "one of the main stated objectives of this policy was and is the reduction of

childhood obesity rates"

, recalls EsadeEcPol, so it is of interest to analyze the

reduction in consumption in homes with children .

"The results indicate that, within the third of households with the lowest economic level, the effect of the policy on the consumption of soft drinks was statistically different between households with and without children. This difference, which is not found in the two remaining tertiles, is economically very relevant: poor households with children would have reduced their consumption per household by almost 25 liters while poor households without children would have barely done so by 6.3 liters (...)

Among households with children the drop would be one 20%

while for poor households without children it would be approximately 7%," they point out.

The drop in the consumption of this type of beverage has in turn caused a

decrease in the purchase of snacks

( mainly

chips

), whose consumption is usually associated with that of soft drinks.

"33% of the poorest households reduced their spending by approximately 5 euros per household per year on snacks. This represents

a decrease of 10.5%, a

percentage that roughly corresponds to the increase in prices for sugary and sweetened beverages. In other words, : We found a cross-elasticity of the consumption of complementary products with respect to the price of soft drinks very close to unity for the poorest third of households," they explain.

This is considered

something positive,

since

the diet of households with lower income has improved

both due to the lower consumption of sugary drinks and the lower consumption of snacks.

"Solely due to a contagion effect, the poorest households

have reconfigured their consumption baskets

even in goods that were outside the scope of the tax."

According to the criteria of The Trust Project

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  • nutrition

  • Taxes