Taxes on Sugary Drinks: Mexico, the UK Soft Drinks Industry Levy, and Berkeley

The tax on sugary drinks is the most-discussed example of "soft" economic paternalism: it does not ban a choice, but makes harmful behaviour a little more expensive.

Why tax the sugar in a glass

The idea is simple: sugar-sweetened beverages are linked to obesity and diabetes, and part of the cost falls on public health care. The tax is meant to shift demand and nudge producers toward less sugary recipes.

Mexico: the first major excise

Mexico introduced an excise of 1 peso per litre in 2014, raising the price of sugary drinks by about 10–11%; purchases of taxed drinks fell by an average of 7.6% over 2014–2016 (PLOS Medicine). By modelling estimates, the reduction in consumption could prevent on the order of 200,000 cases of diabetes over a decade (University of Oxford).

Britain's "tiered" levy

The Soft Drinks Industry Levy, announced in 2016 and introduced in April 2018, is designed differently: it is two-tiered and taxes sugar content rather than volume (£0.24/L at ≥8 g of sugar per 100 ml and £0.18/L at 5–8 g) (PLOS Medicine). This created an incentive to reformulate drinks below the threshold, and many producers cut sugar even before the tax took effect.

Berkeley and the experience of US cities

Berkeley, California, became the first US city with an excise on sugary drinks (2015); studies recorded a decline in their consumption and a rise in water consumption, especially in low-income neighbourhoods (PLOS Medicine).

Why the debate is not closed

Critics point to the tax's regressivity (it hits the poor harder), possible substitution with other calories, and the difficulty of proving a direct effect on body weight and disease incidence. The lesson is that design decides the effect: the rate, the tiering, and the coverage matter more than the mere fact of a tax.