Impact of Tongan taxes targeting foods high in fat, salt and sugar: Interrupted time series analyses
Listed in
This article is not in any list yet, why not save it to one of your lists.Abstract
Introduction
Fiscal policies are recommended as an effective policy to promote healthy nutrition and prevent non-communicable diseases. Sugar-sweetened beverage taxes are widely used, however there are fewer examples of taxes targeting unhealthy foods. Tonga introduced taxes targeting foods high in fat, salt, sugar from 2013 to 2018. This study examines the effect of these tax increases on food prices and import volumes.
Methods
Interrupted time series analysis using segmented generalised least squares regression was applied to assess the impacts of tax increases on retail prices and import volumes of taxed foods and their potential substitutes. Nine food tax increases were examined, varying from US$0.17/kg to US$1.08/kg, and averaging 28% of import value. Observed post-tax trends were compared with projected pre-tax trends (counterfactual), with adjustment for autocorrelation and potential time-varying effects by GDP, international visitor numbers, month, T$/US$ exchange rate, oil prices, and specific international food prices. Bootstrapping was used to estimate 95% confidence intervals, and random effects meta-analysis was used to summarise outcomes across food types.
Results
In the first-year post-tax, retail prices increased for 10 of the 11 taxed indicator foods, with an average increase of 13% (95%CI: 5% to 21%). Seven price increases were statistically significant: fresh and frozen chicken pieces (46% and 39%), mutton flaps (20%), corned beef (20%), ice cream (11%), salted beef (6%) and mayonnaise (3%). Import volumes decreased for eight of the nine taxed foods with an overall mean decrease of 41% (95%CI: 17% to 58%). Two import decreases were statistically significant: sausages (68% reduction) and ice cream (72%).
Conclusion
Food excise taxes in Tonga were associated with clear increases in retail prices and decreased imports of taxed foods. These findings strengthen the existing international evidence that excise taxes on unhealthy foods effectively raise prices and reduce supply.
Summary box of key messages
What is already known on this topic
In contrast with sugar-sweetened beverage taxes, only a handful of taxes on unhealthy food have been evaluated, with studies published from Denmark, Hungary, Mexico and some United States jurisdictions. These evaluations report small declines in purchasing or intake (eg, 3% to 5%), reflecting the low level of taxation (less than 10% of price). We could not identify any evaluations of food taxes outside of Europe or North America.
What this study adds
Tongan taxes targeted a range of unhealthy foods and were introduced at a relatively high level of taxation (averaging 28% of import price). Retail prices increased in 10 of 11 monitored foods, with an average price increase of 13% compared to counterfactual and a 68% pass-through. Import volumes decreased in 8 of 9 taxed foods with an average decrease of 41%. In the year after each tax was introduced government revenue increased by a total of US$2.8 million or US$28 per population.
How this study might affect research, practice or policy
This study strengthens the existing international evidence by demonstrating the effectiveness of unhealthy food excise taxes in raising prices and reducing the supply of unhealthy foods in a small island developing state. Study findings are supportive for policy makers considering introducing unhealthy food excise tax policies, to address high rates of non-communicable disease.
