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An Empirical Evaluation of the Sugar-Sweetened Beverage Tax and Its Implications on Health Policy and Tax Revenues

This study evaluates the effectiveness of the current tax on sugar-sweetened beverages (SSBs) to achieve its intended objectives of curbing excessive consumption and augmenting government revenues. The application of statistical modeling techniques on consumption data from the Family Income and Expenditure Survey (FIES) and price data from the Retail Price Survey for the Generation of CPI provided robust estimates for the total price elasticity of demand for soft drinks, powdered juice products, and concentrates/ready-to-drink (RTD) juice. Results strongly suggest that while the SSB tax led to significant price increases upon its enactment, sustained inflation and market dynamics have diminished this initial impact over time. The study also lends insights on how consumer behavior may affect SSB consumption patterns. The key findings suggest that adjustments to tax rates are necessary to enhance the effectiveness of the tax over longer time horizons. Proposed strategies include automatic adjustments based on inflation rates, transitioning to ad valorem taxes linked to product value, or sugar content-based taxation. These strategies address the challenges posed by excessive SSB consumption, promote healthier beverage choices, and maximize government revenues.


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