Problem diagnosis: the politics of SSB taxation
In 2012, results of the Mexican national nutrition survey showed that 72.2% of the adult population was either obese or overweight. In 2013, after a year of strong civil society advocacy for public health policy to control and prevent obesity, the country’s president launched a regulatory initiative (The National Obesity and Diabetes Prevention Strategy). Additionally, in 2013, a comprehensive Fiscal Reform proposed by the Ministry of Finance (MoF) became effective. Both policy instruments included a tax on SSBs and snacks with more than 250 kcal per 100 g (10% and 8% respectively). The final document was highly criticized by advocacy groups due to its argued loopholes; nevertheless, it was highly promoted by the government and accepted by the food and beverage industry (F&BI) after initial opposition.
The main proponent of the SSB tax was the Senate in December 2012, but the tax was rejected by the Congress (both Senate and Deputies chambers) in May 2013. That same year in September 2013 it was overridden by the MoF as part of the President´s Fiscal Reform. A 1MXP per liter was accepted by Congress in October 2013. Civil society organizations (CSOs) advocating for the measure were Alianza por la Salud Alimentaria, El Poder del Consumidor, Fundación Mídete and the ContraPESO Coalition, all supported by Bloomberg Philanthropies. Academics from the National Institute of Public Health and Aspen Institute also engaged in policy debates and processes. TNCs and national SSB producers opposed the measure, and were represented by several business chambers including ConMexico, Concamin and ANPRAC (see Fig. 2).
In SSBs tax was enacted in 2014 through the convergence of diverse factors: a) evidence of poor results of self-regulatory measures and the high rate of obesity in the country, b) an optimal policy context with a new government administration seeking additional revenue sources, and c) CSOs demands, with an organized advocacy campaign overlapping with the latter interest (24). F&BI representatives also provided input on policy design, arguing their interests were aligned with government objectives. These factors positioned SSB taxation favorably on the policy agenda and facilitated its passage into law. CSOs collectively started promoting SSB taxation in 2012 and proposing ways to increase it consecutive years. In 2015, while advocating for an increase to the SSB tax, CSOs reported being harassed anonymously for their efforts (52).
Several key events took place after the enaction of the new SSBs tax in January 2014: the President agreed with ConMexico (industry consortium - Consejo Mexicano de la Industria de Productos de Consumo, A.C) that it would not increase the tax further after it became effective; a research institute build by Coca-Cola Company was inaugurated by the President, the health minister, and Coca-Cola Mexico CEO; while CSOs continues advocating to double the tax (24).
After the tax was approved, the federal administration launched the Mexican Observatory on Non-communicable Diseases (OMENT – Observatorio Mexicano de Enfermedades No Transmisibles), as the advisory council delegated to monitor and evaluate the National Obesity and Diabetes Prevention Strategy.. The advisory council included 20 representatives from the public sector, academia, professional organizations, civil society organizations, and industry-related representatives (53). The two most influential organizations were ConMexico, representing the SSB industry, and the Aspen Institute Mexico, which was sponsored by the SSB industry and had strong ties to it. Notably, none of the National Health Institutes were represented on the Council, nor were any of the consumer groups that had been instrumental in the promotion and approval of the SSB tax. By the end of 2014 the OMENT had not established the indicators for the SSB tax impact assessment, nor had it produced a report on its impact, while an independent group led by the National Institute of Public Health, funded by Bloomberg Philanthropies, had reported a decrease in consumption (24, 54, 55).
According to the authorities, the Mexican soda tax generated approximately US$1.2 billion in 2014 (56), and even if the new SSB tax approved by Congress. Although the resolution that introduced the SSB tax promised (ermark) to use part of the revenue to increase access to clean water in schools, it is unclear how the revenues were actually spent.
In 2014, the Chilean MoF proposed the largest major tax reform in three decades, with the aim of raising revenue for comprehensive educational reform. Beverage taxes in Chile have existed since 1979, when the Chilean government introduced specific ad valorem taxes on alcoholic and non-alcoholic industrialized beverages, including SSBs. These beverages were initially subject to a 15% tax, which in 1985 was changed to 13%. The 2014 reform included a proposal to increase taxes on SSBs. The inclusion of a 20% tax on all SSBs and an increased tax on all tobacco and alcohol products was advocated for by CSO groups through media campaigns, opinion pieces in newspapers, and public actions. Arguments were mainly health-related and included the high consumption of SSBs in the country at that time, and the 60% prevalence of obesity in the adult population(15). Additionally, tax supporters highlighted the State´s responsibility to protect vulnerable populations through legislation(57).
The main proponent of the tax was the MoF through the Fiscal Reform process. The Ministry of Health (MoH) was not involved in the beginning but was considering, in parallel, regulation for healthy eating, which included food labelling and marketing food to children. CSO proponents of both initiatives were the Coalition for a Healthy Chile (Frente por un Chile Saludable), Senator Guido Girardi, and academics from the Institute of Nutrition and Food Technology (Instituto Nacional de Nutricióny Tenconlogía Alimentaria INTA) and University of Chile. The private sector was mainly represented by A.B Chile, a national consortium of national and transnational food and beverage producers (See Fig. 2).
The F&BI contested the SSB tax proposal, based on similar arguments used by tobacco and alcohol industries, and in other SSB tax cases. They argued job losses, negative effects on the economy and trade, restriction of freedom of choice, regressivity (greater impact on the poorest groups) of the tax, the imposition of a ´Nanny State´ and the ´arbitrary discrimination´ argument questioning the legality of the proposal (14). Lobbying with congressional members intensified, and powerful coalitions were formed in opposition to the regulation. According to the literature, at the time there was no regulation against corporate financing for politicians and lobbying activities. Therefore some legislators and members of the MoF became allies of the industry (58). The persuasive power of the coalition aligned with the F&BI reduced the tax to just 5%, far below the recommended 20% tax to curb consumption (Table 1). This was further undermined by an exemption of some ‘low sugar’ SSBs (less than 15 g per 240 ml) (59). Thus, as happened in Mexico, the tax reform included amendments reducing the impact of the tax and limiting the potential impact on consumption.
Simultaneously, an intense debate about implementing a regulatory framework began – which included a restriction on marketing of unhealthy food to children, and a front-of-pack warning labelling informing consumers through new labels stating when a product is high in calories, sugars, fats and salt (60, 61). After long discussions and pressure from the F&BI lobbyists, the regulation finally came to effect in 2015 (62). After the recent experience with the SSB tax, the National Association of Beverage Producers became A.B. Chile, and hired a former member of parliament and prominent politician to be their representative. Since the implementation of the law, TNCs have filed several lawsuits against the Chilean State challenging the legality of restricting their trademarks, cases which are still pending (62). At the international level, TNCs supported by World Trade Organization (WTO) argued the new labelling violated several trade rules and was an obstacle to international trade.
Colombia’s political context is key to understanding the policy process for the promotion and, ultimately, rejection of the country’s SSB tax. During 2015, the Minister of Health convened a group of experts to draft a series of proposals for a health tax to be included in a Tax Reform Project and be presented to the Congress by 2016. The proposal included plans to increase the tobacco tax and to introduce a new SSBs tax (63). At that time, Colombia engaged in extensive public and policy debates around the government's peace referendum with the Revolutionary Armed Forces (FARC), which was finally achieved on November 2016 (63). The latter resulted in a convoluted political scenario and one that could be argued as influencing the rejection of the tax, as the policy agenda was highly focused on the peace referendum.
The initiative to introduce a SSB tax came from the MoH, and was supported by CSOs and coalitions such as Educar Consumidores and Colombian Alliance for Healthy Eating (Alianza por la Salud Alimentaria Colombia), the leading CSO of the cause, and an alliance of several other CSOs who joined to support the fiscal measure. Academics supporting the measure were based at Universidad Javeriana, while the main representatives of the TNCs and SSBs producers included Postobón, ANDI, FENALCO and SIC (see Fig. 2).
A SSB tax was proposed in 2016, supported by the government and CSO groups, but was not approved. The CSO Educar Consumidores was the main advocate for a 20% tax on SSBs, just as was advocated n Mexico and Chile, but the tax was voted against after several months under Congress scrutiny. Similar to Mexico and Chile, intense industry lobbying to Congress was undertaken, and anonymous harassment of activists (proponents of the tax) was reported (64).
Public statements by the Chamber of the Beverage Industry representative denied the benefits of the SSB tax. Pro-industry members argued that the SSB tax would cause job losses among the poor and that “the impact is of great concern especially in those people living in rural areas where bottled drinks constitute the sole reliable source of water”(65). Meanwhile the F&BI TNCs collaborated in PPPs and CSR initiatives such as the establishment of the International Energy Balance Network, led by Coca-Cola International, and recruiting allies in the country (66), or by providing drinking water in poor communities, in collaboration with other partners (67). The argument and its subjacent causal path to a hydration issue go beyond the soda tax policy, as in many cases such as Mexico, Chile and Colombia, water spring concessions (use and exploitation) and the governance of water access have loopholes that favour TNCs (68, 69).
The SSB industry strongly lobbied against the tax. For example, in September 2016 the National Association of Businessman in Colombia (ANE) and Postobón, a local subsidiary of a SSB TNC, won an important lawsuit against the State (63). This lawsuit demanded the Superintendent of Industry and Trade to withdraw an advocates’ media campaign on the negative effects of SSBs, claiming that it presented false and misleading information. Additionally, during the summer and spring of 2016, the media debate intensified. The newspaper Vice Colombia published three opinion articles supporting the measure, shortly before its editor was abruptly fired, increasing public demands for accountability. Polls conducted by the CSO showed that 70% of the population was in favour of the measure, and 42 of 268 members of Congress supported it (64). However, after intense lobbying during the last final months of 2016, it was finally rejected by the Congress. This case mirrored the other two cases but was unsuccessful, with no window for further discussion under the current political administration.
Motivations and framing for and against the SSBs tax
Important differences were found in understanding the ways in which values and evidence were used to motivate and frame policy design in each country. First, while the MoF drove the SSB taxation initiative in Mexico and Chile, in Colombia the main proponent was the MoH, with support from the CSO. While both the initiatives in Colombia and Mexico originated within MoH, and were framed as part of a comprehensive plan to tackle obesity, in Chile it was only included as part of a broader fiscal reform. These findings suggest that policy change was in part attributable to inter-ministerial synergy of the government in framing the policy debate. While the regulatory instruments were the same, framing the SSB tax as a health-related policy appears to have legitimized public discourse, although economic arguments were always needed. This is a core mandate of the MOH, not MOF, which potentially explains variations in frame sponsorship across the countries. The MOH in Chile and Mexico participated to a limited extent in drafting the SSB tax, in both cases the MOH supported the measure, although in Mexico the support came much after its approval in Congress, as Mercedes Juan, the Secretariat of Health had close links to the food industry (24).
Nevertheless, SSB taxation was framed beyond a public health rationale. In Mexico and Chile, SSB taxes were framed as a revenue generation mechanism (20, 24). In Colombia, where the tax was largely framed as a health intervention, the need to raise additional revenue was not substantively communicated as it was in the other two countries, and largely failed to gain traction in a crowded political agenda.
Second, as shown in Table 1, the type and rate of the tax in each country varied, and all three failed to pass taxes of 20%, the minimum price increase considered by experts to have a substantial impact on obesity rates in a short span of time (70, 71). While there is little evidence on how the final level and type of taxation were established (1MXP per litre in Mexico and a two-tier 5% in Chile), interference of the industry was reported in both cases. The rationale behind setting the level of the tax was not publicly available, and both taxes in Chile and Mexico were significantly less than the evidence-based simulations recommended (72, 73). Still, there is evidence that this can change; under the new presidential administration (2018–2024), the Mexican SSB tax has been increased due to inflation from 1.17 MXP per litre to 1.26 MXP per litre, and might increase to 2.26 MXP per litre (74)
Third, of the three countries only Mexico explicitly outlined plans to evaluate the impact of the tax. This was accomplished by launching a multi-sectoral platform to report the impact of this and other policies included in the MoH obesity strategy (Fig. 3). Nevertheless, to-date, published impact evaluations of SSB taxes have only been conducted by externally-funded academics (Fig. 3). How this evidence is used by government officials is unclear. For instance, in Mexico the opaque governance of OMENT (which ceased operations in 2019), lacking transparency and accountability mechanisms, means that little is known about how these findings were received, managed or supported, or how F&BI representatives may have influenced the non-response.
In all three countries, legislation containing SSBs taxes was vague on its evidentiary basis. These included: a) a lack of clarity around resource allocation using SSB revenues to accelerate health gains, b) missing justification for the chosen size of the SSB tax, c) an undefined plan for multisectoral policy implementation and/or evaluation; and d) in the specific case of Chile, rationale for increasing the existing staggered levy on SSBs, with a health-oriented purpose policy.
Institutional arrangements and coalitions driving and limiting SSBs tax policy
Our findings suggest that TNCs producing and selling SSBs have remained for the last 20 years a long in a powerful position in all the countries of study. For instance, the former Mexican President Vicente Fox (2002–2006) was previously the CEO of The Coca-Cola Company-Mexico, and it was during Fox’s leadership of Coca-Cola Mexico that it became Mexico’s top-selling soft drink, increasing Coca-Cola’s sales by almost 50% (75). Mexican Coca-Cola-FEMSA (the largest Coca-Cola subsidiary in the world, which The Coca-Cola-Mexico is a shareholder with 28%) is one of the five largest contributors to the gross domestic product (GDP) with Bimbo, Gruma (both F&BI), Cemex, and Telmex. Coca-Cola-FEMSA and PepsiCo, either directly or through CONMEXICO or ANPRAC, have been involved with political institutions, such as the Centre for Beverage Innovation, opened in 2016 with the MoH and the Mexican President.
In Colombia, Postobón was one of the top 14 largest companies contributing to the economy; from 2016 to 2017, its income increased by 4.7%. The beverage company has many social programs, including a university and a large program to promote active lifestyles. It has been awarded by national and international institutions, such as the Swedish Business Network in Colombia and the Institute of Internal Auditors of Colombia and the Secretariat of Transparency of the Presidency, allowing the company to improve its reputation and open business opportunities in the region´ (76).
In Chile the main opponents to the SSB tax were members of the National Association of Beverage Producers (Asociación Nacional de Bebidas Refrescantes –ANBER), including Coca-Cola Andina (Embotelladora Andina y Embotelladoras Coca-Cola-Polar), Embonor, and CCU. In 2011, the association reported an increase in SSB consumption of 11.8%, described as related to “growing the economy by the increase in jobs opportunities” (77). In 2014, just before the SSB tax was included in the fiscal reform, ANBER became A.B.Chile (Alimentos y Bebidas Chile), growing the consortium as Nestlé and Carozzi joined. To date, it is the country’s most powerful food and beverage group, representing more than 20 companies (78).
Coalitions formed against the SSB tax policy were mainly composed by TNCs and national SSBs producers (which some were acquired by TNCs in the process), including business associations, confederations and trade organizations, and in some cases relations with academics or CSO, as some of the boards of trustees’ or advisors were part of the F&BI (79) (Fig. 2). Part of their influence is likely attributable to their ability to leverage financial and strategic resources to position their views in the pubic domain. The representatives of such coalitions engaged in discourse around cooperation with public health aims, and built alliances with local and national government entities (80).
In contrast, powerful coalitions were also formed for the purpose of supporting the tax. They represented several CSOs and academics, mainly via the Alianza por la Salud Alimentaria (both in Mexico and Colombia) and by Frente por un Chile Saludable in Chile. In Colombia, CSOs were advised by some academics, but academics did not lead the call. In Mexico, by contrast, academics led research underpinning SSB taxation, supported the drafting of the bill, and assisted with advocacy efforts (24, 80). In Chile, while well-known public health academics were supportive of the measure, they were mainly advocating for other policy measures, such as warning labels on snacks and beverages, and had a long-standing close relationship with some policy entrepreneurs in bringing the policy to the agenda-setting process. At the time of the policy debates, and agenda setting, some pro-tax groups were supported by international organizations, and prestigious US based academics, supporting the coalitions (81). However, in Chile, the Nutrition and Technology Institute in Chile (INTA), a prestigious academic institution supporting the legislation, was undermined by undisclosed conflicts of interest that damaged its credibility.
In the cases of Mexico and Colombia, corporate interests influenced the media. In Colombia, the largest soda producer in the country owns the primary media outlet. Therefore advertising by CSOs supporting the tax was denied. Likewise, in Mexico, CSOs reported that the two main broadcasting corporations denied space for their campaign showing the amount of sugar in SSBs and other similar campaigns designed to support the measure. Regardless of a clear power imbalance surrounding the public policy debate between those who supported or opposed the tax, in Mexico, the pro-tax coalitions, led by civil society, maintained a powerful position in public opinion.
In Chile, debate centred around broader regulatory measures and the principles behind fiscal reform, with little focus on the specifics of a SSB tax. The primary frame sponsor for regulatory changes was the Senate head of the Health Commission, Guido Girardi, a media-savy spokesman of CSOs and academics (82). Likewise, in Mexico, a Senator, Marcela Torres, advocated for the SSB tax, and built a strong coalition with Alianza por la Salud Alimentaria, academics and the country office of the Panamerican Health Organization (PAHO), by positioning the tax as a health measure on the policy agenda. In Colombia, CSOs gained important public support for the SSBs through polls and social media, but policy entrepreneurs within the private sector were able to leverage Congressional contacts to successfully counter the measure.