What poor households should allocate to healthy taxes

What poor households should allocate to healthy taxes

The most recent report from the Fiscal Observatory of the Javeriana University showed some consequences that would leave the tax reform of the government of Gustavo Petro which was approved by Congress.

(Read: The salary from which withholding will apply in 2023).

One of the focuses was the healthy taxes, which include ultra-processed foods and sugary drinks. A tax that seeks to discourage the consumption of certain products that are harmful to health in excess.

The Observatory indicates that this will have an effect on consumption and its long-term consequences will be health benefits for consumers.

These benefits are manifested through lower rates of overweight and obesity. It has also been documented that the regressiveness in the economic impact of this tax on the poorest people is overcome by the saving of public and private resources destined to address health problems.”, they explain.

(Also: What will we eat in 2050? These would be the foods that will end).

However, they also ensure that there will be a significant effect for those who wish to purchase these products, especially in households with less income: “As a consequence of these taxes, the poorest households will need an additional $5,000 a month to continue with the same consumption patterns.”

However, if those 5,000 represent 0.6% of the monthly expenses, for the poorest households at the time of assessing them in their income they will represent 3% of the total. Along with this, the richest households will need an additional $19,000 per month.

This additional money represents 0.07% of your income and 0.15% of your expenses. These results assume that the same levels of consumption of this type of goods are maintained and do not take into account the possible benefits in the long term.”, the report points out.

In 2023, taxes on sugary drinks will begin to operate with a 3% increase in the price of low-sugar products and 6% for the price of products with a high level of sugar. Likewise, for 2024 and 2025 these taxes will have an increase.

(Keep reading: Would tax reform affect financing costs?).

“The concern at this point is that the impact is not large enough to deter consumers from buying these types of products. Indeed, the WHO has established that the appropriate design for this type of tax must increase the value of its sale by at least 20%.”, they explain from the Observatory.

Finally, the report highlights that a rigorous study was not carried out to measure the impact on consumption and health, so the possibility of adjusting this time should remain open.


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