Abstract
Introduction It is unclear whether tax waivers are a useful public health intervention for lowering food prices and improving nutrition, or whether fiscal gains go largely to importers, wholesalers and retailers. Tonga reduced and removed 10% to 20% import tariffs and consumption taxes on a selection of healthy foods in 2013, 2015 and 2016. This study investigates the impact of these changes on retail prices and import volumes of targeted foods.
Methods Interrupted time series analysis was used to quantify the percentage changes in retail prices and import volumes in the first year after each tax waiver compared with a counterfactual based on pre-existing trends. A segmented linear regression model was run with adjustment for autocorrelation and the effects of gross domestic product, international visitors, month, exchange rate and international oil prices. Meta-analysis technique was used to summarise findings across foods.
Results On average, there was a suggestion of a small decline in retail price of tax waivered foods (−4%, CI −10% to 2%) with an average pass-through to a reduced price for consumers of 51%. Two of nine relevant foods had statistically significant evidence of price declines: frozen vegetables (−20%, CI −25% to −14%) and cooking oil (−3%, CI −5% to 0%). Overall, import volumes of tax waivered foods did not increase, and instead, there was suggestive decline (−20%, CI −45% to 15%). No import changes were statistically significant.
Conclusion While there was no evidence of increased food supply for tax waivered foods, significant price declines were observed for frozen vegetables and tinned mackerel. There was evidence of moderate pass-through of tax waivers to lower retail prices. Interpretability was limited by variability in estimates and a shift from imported to locally sourced foods. Further evaluation of tax waiver effects is needed.