A microeconomic analysis of the Colombian tax on ultra-processed food (Ley 2277)
No. 15 (2025-11-08)Author(s)
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Giuliano BianchiUniversity of Applied Sciences and Arts Western SwitzerlandORCID iD: https://orcid.org/0000-0002-5766-6933
Abstract
This article presents a microeconomic analysis of Colombia’s “healthy tax” on ultra-processed foods introduced by Law 2277. Its hybrid design —based on both ultra-processing and nutrient thresholds— is framed as a Pigouvian response to negative externalities. Tax-incidence analysis suggests that, although the tax is legally levied on producers, much of the burden is passed on to consumers, as inelastic demand limits effects on quantities while raising consumer costs. Substitution and income effects are also considered, with preliminary evidence pointing to greater impacts
on low-income households due to differences in demand elasticities. Available data suggest modest reductions in consumption, yet consumers need time to adjust their behavior and health outcomes emerge only with delay. Because health is a lagging indicator, economic analysis must be complemented with epidemiological research, to determine whether observed changes lead to meaningful improvements in public health.
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