Does It Really Reduce Obesity? Substitution Effects of Sugar-Sweetened Beverage Tax—Empirical Evidence From China

Abstract

Background

In China, the increasing prevalence of obesity has become a significant public health challenge, prompting the government to explore various intervention measures, including tax policies. Although the Healthy China 2030 plan emphasizes the importance of promoting health, a tax on sugar-sweetened beverages (SSBs) has not yet been implemented in China, and there is a significant lack of localized empirical research on its actual effects in the country. This study aimed to fill this gap by exploring the potential impact of an SSB tax within China’s specific socioeconomic and cultural context on the obesity issue.

Objectives

This study aimed to examine the impact of the tax-induced increase in the price of sugary drinks on the consumption of various types of sugary foods in households, based on data on household consumption of sugary foods in 31 provinces from 2000 to 2015 and to calculate the change in the number of calories in households due to the increase in the price of SSBs to assess the net impact of the SSB taxes.

Methods

This study used the Quadratic Almost Ideal Demand System model, using price elasticity and substitution effects analysis, to evaluate the impact of an SSB tax on overall calorie intake and obesity rates among Chinese households.

Results

The impact of the SSB tax was evaluated, revealing that the price increase led to a nationwide reduction in SSB consumption, with the most significant decrease observed in low-income households. After a 20% price hike, SSB consumption in low-income families decreased by 29.42%. However, owing to the substitution effect, this price increase also led households to shift toward consuming other high-sugar foods, ultimately resulting in a 2.57% increase in total caloric intake.

Conclusions

Although the SSB tax could reduce the consumption of sugary drinks among low-income families, the increase in consumption of high-sugar substitutes will lead to an increase in overall caloric intake, which may undermine the effectiveness of SSB taxes. This suggests that merely imposing an SSB tax may not be effective in reducing obesity rates in China. The research highlights the need for a more comprehensive strategy, such as expanding the tax scope to include more high-calorie foods, to more effectively reduce the prevalence of obesity.