A fortnight ago, the Mexican legislature passed two new laws. One imposes a new one-peso (S$0.10) per litre tax on sugary drinks. Another imposes an 8 percent tax on foods that contain more than 275 Calories per 100 grams. Mexico is the latest country to try using tax policy to stem the tide of obesity.
The government and legislators were stirred into action as the country’s obesity rate surpassed that of the United States. According to Bloomberg, the obesity rate in Mexico is now 32.8 percent, a shade higher than the US’ 31.8 percent. Mexico has one of the world’s highest yearly soda consumptions, with the average Mexican drinking 163 litres of soft drink annually. Diabetes has become a major killer in the country.
Both Mexico’s and the US’ obesity rates are however surpassed by Egypt at 35 percent, Kuwait at 43 percent and the Micronesian island of Nauru at 71 percent.
The World Health Organisation (WHO) defines obesity in adults as a Body Mass Index (BMI) of over 30. A BMI of between 25 and 30 would make one overweight. BMI is calculated by taking a person’s weight in kilograms, divided by the square of his or her height in metres.
Obesity has been steadily rising here too. According to Singapore’s Health Promotion Board,
The National Health Survey (NHS) 2010 findings revealed a 0.65% annual increase in the prevalence of obesity (BMI 30) over the past six years, from 6.9% in 2004 to 10.8% in 2010.
But of much greater concern is that our kids are fatter. Data found at http://www.data.gov.sg (and available in Yearbook of Statistics 2013) show that by age ten, our children already have obesity prevalence rates somewhere between 12 and 15 percent (though I am not clear how obesity is defined in children).
Remember, we’re not referring to being merely overweight. We’re referring to obesity. At the rate we are going, it won’t be long before we too may have to consider public policy measures.
The fly in the ointment is that taxation doesn’t have a track record of being effective. Mexico may yet prove otherwise, and for that reason alone, its experiment is worth watching.
The tax on soft drinks should be easy to implement. Soft drinks are almost always made and bottled (or canned) by large companies. If the Mexican government levies the tax at source, it should be easy to enforce. The one-peso-per-litre tax may seem small, but according to some press reports I have seen, Mexicans typically buy their soft drinks in 2-litre bottles, so the tax should be noticeable.
However, price increases of this moderate scale tend to have at best a short term effect. People adjust to the higher price level before long and my guess is that consumption will quickly bounce back to previous levels.
The government is arm-twisting soft drink makers to introduce products with lower sugar content. That can be done, but where’s the demand? People must want to change their consumption habits, and when it comes to sweet things, it is probably very hard.
A better, if much more intrusive, model would be how fuel efficiency has been gradually lowered in US-made cars. This is done through something called Corporate Average Fuel Economy (CAFE) federal regulations. The federal government sets a standard of X miles per gallon, and a car manufacturer must demonstrate that the sales-weighted average of the various models of cars sold in the period meets or exceeds the standard. The manufacturer can continue to sell some gas guzzlers, but they must be balanced by sales of very fuel-efficient models if the company is to meet the target. A manufacturer who fails to make the target has to pay a penalty based on the distance from the target. Over the years, the CAFE standard has been tightened and there has been quite remarkable progress in improving fuel efficiency.
Soft drink companies could be set mandatory standards for average sugar content (and artificial sweetener content), with the standards getting slightly stricter year by year. People’s taste should be able to gradually adjust, such that after ten years, we may be consuming a third less sugar even if the literage of soft drinks remains the same.
And just in case you don’t think sugar content is a problem, watch this 45-minute documentary from Canadian Broadcasting:
I looked at the sugar content of common soft drinks in Singapore. This is what I found:
Several brands do not declare nutritional information on their labels. Now, why is it not mandatory in Singapore to do so?
Greasy food is everywhere
As for Mexico’s 8 percent tax on calorie-rich food, I am still trying to find out how it’s going to work. Unlike soft drinks, the production of rich, greasy food is extremely dispersed. There aren’t just a few companies making them. At countless street corners, food stands do the job. How is the government going to take samples to check if what they make and sell is over 275 kilocalories per 100 grams and collect the tax?
Moreover, there will surely be huge controversy over methods of measurement. An example from a fast food chain would be this: Are we referring to the calorific density of just the burger alone, or the average for the entire combo meal (i.e. including french fries and soft drink)? One method could yield a result above the threshold and the other below it.
Speaking of that, how many calories are there in a burger? A McDonald’s Big Mac meal (as seen from McDonald’s Singapore’s nutrition calculator) has 1,133 kcal and 1,320 milligrams of salt. The Big Mac itself has 536 kcal, the medium fries 384 kcal and the medium Coke 213 kcal. Unfortunately, the weight is not stated, so I cannot compute the calorific density.
Singapore’s Burgerking website does not provide nutritional information — so much for corporate responsibility.
Burger King US says on this site that its Whopper meal (i.e. including a small serving of french fries and a small glass of Coca Cola) has 1,160 Calories. But it doesn’t give the grammage either, so I can’t calculate the Calories per gram. However, this other site says that
The Burger King Whopper without cheese is available in a 290 gram serving which contains 670 Calories with 360 of those Calories coming from fat. The Whopper without cheese also has 40 grams of fat, 51 grams of carbohydrates, and 29 grams of protein.
Assuming the Whopper in other countries is the same, this means it has 231 kcal per 100 grams, just below Mexico’s tax threshold of 275 kcal.
Another complication is that it isn’t the calorific density of the food that is key to over-consumption; it’s the total calorific intake. One could well consume the same excessive number of calories (“excessive” depends on one’s metabolic rate and activity level) through eating larger quantities of lower density food.
Between this and the difficulty of taxing innumerable tiny food shops and snack stalls, I can’t see Mexico’s policy delivering intended results.
It seems to me that the best approach is to educate people to want to control their waistlines, but that is far, far harder to do than passing new taxes.