Short Term Effects of Excise Taxes on Demand for Carbonated Sweetened Beverages in Qatar.

Abstract

From January 1st 2019, the Qatari Government implemented a 50% taxation on “Sugar-Sweetened Carbonated Beverages, or SSBs” in Qatar. Taxation of unhealthy products is an effective, economic tool widely used across the world. This study looks into the short term effects of this tax on the consumption behaviour of consumers in Qatar. Using a survey instrument, the pre-tax and post-tax consumption was measured. Using the data collected, the change in consumption was examined, and the price elasticity of demand was calculated. The study found a significant reduction in consumption in the post-tax period. The price elasticity of demand was found to be highest among consumer cohort who consumed high amounts pre-tax, and unemployed or out of labour force consumers. (-1.37 and -1.14 respectively). The lowest elasticities were found to be among consumers who consumed lower quantities pre-tax, as well as Qatari consumers of SSBs (-0.39 each). The study also illustrates the perception of taxes among consumers. The price elasticity of demand for SSBs in Qatar was found to be 8%. SSB syrup import data leading up to and after the implementation of the taxation was also examined. From these early results, the taxation can be deemed to be effective in curbing SSB consumption, but subsequent studies that look into economic, commercial and health aspects are necessary to understand longer-term impact of such taxes.