Raising the VAT on sugary and sweetened beverages from 10% to 21% managed to reduce the consumption of these products only in lower-income households. One of the government’s fiscal novelties last year essentially affected the most vulnerable families, therefore. In other words, middle and low incomes did not reduce their intake of these unhealthy drinks despite the fact that they increased in price.
In effect, the distribution, and not the restoration to those who were not affected by the measure, transferred that VAT increase to prices. On average, these products went from 1.25 euros to 1.39 euros per liter.
These are the main conclusions of the latest study published by EsadeEcPol this Wednesday and prepared by Ángel Martínez, Javier Martínez and Jorge Galindo.
The authors of the study, who have crossed the family budget survey (EPF) prepared by the National Institute of Statistics (INE), discover, therefore, that the reaction of consumption after this tax increase depends on the economic capacity of the household. Specifically, households in the poorest 33% segment reduced their consumption of soft drinks by 11 litres.
Another piece of information resulting from this study: it was poor families with children who especially noticed this reduction in consumption. These households also reduced the consumption of snacks by 10.5%, which is equivalent to five euros.
The objective of the Government with this fiscal change was to reduce the consumption of soft drinks in general. It was a campaign promoted by the Treasury and, especially, by the Ministry of Consumption. Spain dedicates almost 10% of its total health expenditure to diseases related to obesity, a figure higher than the average for developed countries, which was considered urgent to reverse.
The tax has caused an increase in the price of sugary and sweetened drinks of 12 cents per liter. In other words, the rate has been transferred by 96% to the prices of soft drinks in supermarkets.
