Sweetened beverage taxes and changes in beverage price, imports and manufacturing: interrupted time series analysis in a middle-income country

Abstract

Background: The Pacific Island nation of Tonga (a middle-income country) introduced a sweetened beverage tax of T$0.50/L in 2013, with this increasing further in 2016 (to T$1.00/L), and in 2017 (T$1.50/L; US$0.02/oz). Given the potential importance of such types of fiscal intervention for preventing chronic disease, we aimed to evaluate the impact of these tax changes in Tonga.

Methods: Interrupted time series analysis was used to examine monthly import volumes and quarterly price and manufacturing 1 year after each tax change, compared with a counterfactual based on existing trends. Autocorrelation was adjusted for when present, and adjustments were made for changes in GDP per capita, visitor numbers, season and T$/US$ exchange rate.

Results: In the year after the 2013, 2016 and 2017 tax increases, the price of an indicator soft drink increased by 16.8% (95%CI: 6.3 to 29.6), 3.7% (- 0.6 to 8.3) and 17.6% (6.0 to 32.0) respectively. Imports of sweetened beverages decreased with changes of - 10.4% (- 23.6 to 9.0), - 30.3% (- 38.8 to - 20.5) and - 62.5% (- 73.1 to - 43.4) respectively. Juice imports changed by - 54.2% (- 93.2 to - 1.1), and sachet drinks by - 15.5% (- 67.8 to 88.3) after the 2017 tax increase. Tonga water bottling (T$) increased in value by 143% (69 to 334) after the 2016 tax increase and soft drink manufacturing increased by 20% (2 to 46, albeit 5% market share).

Conclusions: Consistent with international evaluations of sugar-sweetened beverage taxes, the taxes in Tonga were associated with increased prices, decreased taxed beverages imports, and increased locally bottled water.

Keywords: Evaluation; Natural experiment; Pacific; Quasi experiment; Soft drink; Sugar-sweetened beverages; Sugary drinks; Taxes; Time-series; Tonga; Trade.

Fig. 1

Average price of indicator taxed beverages post SSB tax increases in Tonga in 2013, 2016 and 2017, compared to what was expected based on existing trends, 2009–2018. The SSB tax included soft drinks and flavoured milk in all years, and juice in 2017 only. Notes: Adjusted for autocorrelation, visitors, GDP per capita, season and exchange rate T$/US$. Dashed vertical lines indicate the timing of the tax changes

Fig. 2

Average price of indicator untaxed beverages post SSB tax increases in Tonga in 2013, 2016 and 2017, compared to what was expected based on existing trends, 2009–2018 (a 15% milk tariff was removed in 2016). Notes: Adjusted for autocorrelation, visitors, GDP per capita, season and exchange rate T$/US$. Vertical lines indicate increases in SSB taxes that did not apply to these beverages. The grey area indicates that juice was less likely to be a potential substitute for taxed beverages because it became included in the tax system

Fig. 3

Impact of SSB tax increases in Tonga in 2013, 2016 and 2017 on taxed beverage import volumes, compared to what was expected based on existing trends. Note: Sweetened beverages (Harmonised system [HS] code 2202), juice (HS 2009) and powdered drink sachets (HS 1701.91.10), with adjustment for autocorrelation, GDP per capita, visitor numbers, season and exchange rate (T$/US$), 2009–2018. Source: Tonga Customs

Fig. 4

Impact of SSB tax increase in Tonga in 2013, 2016 and 2017 on untaxed beverage import volumes, compared to what was expected based on existing trends (the 15% tariff on milk was removed in 2016). Note: Milk (HS 0401.10 and 0401.20), juice (HS 2009) and powdered drink sachets (HS 1701.91.10), with adjustment for autocorrelation, GDP per capita, visitor numbers, season and exchange rate T$/US$, 2009–2018. The dashed line denotes the timing of the SSB tax changes. The grey area indicates a period when the beverage was taxed and substitution from the other taxed beverages was less likely to be occurring. Note a 15% import tariff was removed from milk (tax decrease) at the time of the 2016 tax change, but otherwise these beverages were not subject to any tax changes. Source: Tonga Customs

Fig. 5

Water and soft drink manufacturing value in Tonga in the first year after the 2016 sweetened beverage tax increase. Notes: Tax change was from T$0.50 to T$1.00/L. Comparison is with what was expected based on existing trends, adjusted for visitor numbers, GDP per capita, exchange rate T$/US$ and autocorrelation