in contributing to the country's obesity pandemic. A longitudinal study in Brazil also suggested a possible association between consumption of ultra-processed foods and cognitive decline (requiring additional research to ascertain causal mechanisms) (Gomes et al., 2023). It is projected that proportional consumption of ultra-processed foods will increase in Brazil, particularly among rural, poorer, and less educated population groups, reducing the current gap in consumption profiles characterized by higher ultra-processed foods consumption among urban, wealthier, and more educated population groups (Louzada et al., 2022). These trends have significant human as well as economic costs. Overweight and obesity alone represent an annual direct cost of R$ 1.5 billion for resulting NCD treatment within Brazil’s public Unified Health System (SUS) (Ferrari et al., 2022). If no changes occur, it is projected that by 2030, the annual costs to SUS for NCD treatment will reach R$ 4.2 billion, with an additional R$ 45.5 billion in losses to the economy due to years of productive life cut short among the population with these conditions (Giannichi et al., 2023). As part of broader preventive measures, Brazil is among many Latin American countries that have advised against ultra-processed food consumption in national dietary guidelines (Monteiro, et al., 2019). These guidelines emphasize the importance of basing one's diet on fresh, minimally processed foods and culinary preparations, such as beans, rice, fruits, coffee, bread, cassava, and fish, while avoiding the consumption of ultra-processed foods like soda, cookies, packaged snacks, instant noodles, sausages, etc. (Brazil, 2014).

Arguments in support of these guidelines also point to the adverse environmental impacts of the production and consumption of ultra-processed foods, with the water footprint of those who consume them the most being 10% higher than those who consume them the least (Garzillo et al., 2022). The production of a single 500ml soda, for instance, requires an estimated 168 to 309 liters of water (Ercin et al., 2011; Hoekstra et al., 2007; Hoekstra, 2019). In Brazil, the prioritization of arable lands for the production of commodities like soy, corn, and sugarcane, driven by export incentives, has also resulted in a neglect of staple products for the domestic market. This shift in production focus has led to significant disruptions in the production and distribution chain, contributing to high levels of food waste and increased prices of these essential food items (Baccarin and Oliveira, 2021; Preiss, 2021). Moreover, specific tax incentives are also granted in regions like the Manaus Free Trade Zone (ZFM) which incentivize the production of soft drinks and other ultra-processed beverages. This arrangement allows companies to produce concentrated syrups without paying the Industrialized Products Tax (IPI), while receiving credits that can be used to offset their tax obligations. The Federal Revenue office estimated a resulting annual revenue loss of approximately R$ 4 billion for the country, despite the creation of a mere 762 jobs in the region (Brazil, 2018). Additionally, the inclusion of sausages, biscuits, and other ultra-processed foods in the Basic Food Basket, which grants tax benefits similar to those provided for staple foods like rice and beans, has raised concerns. This practice may inadvertently support unhealthy food choices while compromising efforts to promote the consumption of fresh and minimally processed foods (Campos and Carmélio, 2022).

# 2.3. International experience on taxation of ultra-processed foods

The literature on taxation of unhealthy foods is part of a growing body of evidence on health taxes, which originally focused primarily on tobacco, alcohol, and sugar-sweetened beverages. These taxes aim to improve health outcomes, reduce future health expenditure, and increase public revenue. These policy 5