Sin Taxes and Public Health: Political Process and Distributional Consequences in Mexico and Colombia

Abstract

As the burden of non-communicable diseases (NCDs) increases globally and more money is spent treating NCDs, effective solutions that prevent NCDs, while also generating fiscal revenues, are urgently needed. This dissertation uses qualitative and quantitative methods to assess two such policies: a sugar-sweetened beverage (SSB) tax in Mexico and an increased tobacco tax in Colombia. By looking at how sin-taxes are passed and at the effects of such taxes on population health and finances, this thesis provides insight into two key parts of the policy making process, namely passage, and simulation and evaluation. Chapter One provides an overview of and some conclusions to the dissertation. In Chapter Two, I use published documents, media articles, and interviews with key stakeholders to present a single case study on the politics of passage of the SSB tax in Mexico. This chapter explains how Mexico managed to pass an SSB tax despite opposition from a strong national SSB industry, offering important lessons for policymakers within Mexico and in other countries in developing their own strategies in passing sin taxes. In Chapter Three, I examine the potential distributional impact (across socio-economic groups) of Mexico’s SSB tax on delayed mortality rates from cardiometabolic disease and on tax revenues. Using an extended cost-effectiveness analysis framework (ECEA), I find that although the poor would benefit the most in terms of delayed death rates from the SSB tax, they would also pay a larger share of their annual income on taxes. Chapter Three uses an ECEA framework to assess the distributional impact of Colombia’s tobacco tax increase on selected health and financial outcomes. I find that the tobacco tax increase would have substantial implications for the country’s population health and financial well-being, with large health benefits likely to accrue to those quitting smoking and those not initiating smoking, among the two poorest quintiles of the population. Those among the poorest income quintiles who continue smoking, however, would see the largest financial losses as a result of the tobacco tax increase.