The impact of taxing sugar‐sweetened beverages in México: A censored QUAI demand system approach

In 2014, México imposed a 20% price hike on sugar‐sweetened beverages (SSB) to curb its obesity epidemic, paving the road for other Latin‐American countries to adopt similar measures. This paper estimates a beverage demand system with a censored Quadratic Almost Ideal Demand system. Our study finds that a 20% tax on SSB can reduce SSB consumption between 16.6% and 19.0%. Additionally, the price increase is associated with increased water consumption if an equivalent income compensation accompanies the fiscal approach. Finally, while the effect is small, our results indicate that education is the primary demographic factor in decreasing SSB consumption.