Abstract
Abstract: Background: The prevalence of overweight and obesity has reached alarming rates in Mexico. To combat the growing obesity problem, Mexico introduced ENSOD in 2013. An integral strategy that includes a tax on sugar-sweetened drinks and on calorie-dense foods with low nutritional value including cookies was added in 2014. In this paper, I analyze the impact of IEPS on prices and consumption of sweet cookies since tax introduction. Methods: To investigate tax impact on prices I used national data by the INEGI to inform a model for panel data. I applied three scenarios each assuming a normal and a logarithmic distribution. To analyze the potential effect on consumption I applied three different scenarios for elasticity and tax amount. Results: For prices, my results show that industry shifted the tax over to consumers by the amount of the tax or more. Simultaneously, the analysis indicates a moderate decrease in consumption. The scenario analysis shows that the tax would be more effective in reducing consumption of cookies if demand was elastic and if the tax amount was higher. Conclusions: The current contribution of fiscal policy to achieve the objective to reduce obesity prevalence and respectively lower diabetes rates among the Mexican population is to be rated as modest at most. Fiscal policy could have a stronger impact, if the tax amount was higher. Regulations for more transparent packaging and pricing are lacking and public policy should consider a limitation of portions per package to more successfully decrease consumption of sweet cookies. Finally, more evaluative work needs to be completed to allow reliable conclusions about the tax impact on consumption, overall calorie intake and obesity in Mexico. Tax impact could be greater, suggesting a reconsideration of taxation rate and an overall need to evaluate the strategy as a whole.