Mexico Contemplates Higher Soda, Snack Tax

The move could raise revenue by 130% next year.

September 16, 2015

MEXICO CITY, Mexico – The Mexican Congress is considering a hefty increase in its soda and junk food taxes to help offset a decrease in tax revenue, the Mexican Daily News reports. The hike in the Special Tax on Products and Services (IEPS), which targets high-calorie drink and food products as well as tobacco and alcohol, would generate an estimated 363 billion pesos next year, up from 159 billion in 2015.

Leobardo Brisuela Arce, president of the Mexican Institute of Public Accountants (IMCP), said such a tax increase would push tax revenues up by 130%. “This is a very important figure because we are predicting a 250-billion-peso decrease in income tax revenue while IVA [the value-added tax] is predicted to grow by just 30 billion pesos next year,” he said.

Not everyone is happy about the proposed hike. Manuel Herrera, president of the Confederation of Industrial Chambers, said the increase would unfairly impact the poor, who are more likely to buy snacks and soft drinks.

Mexico began tacking on an 8% tax on sugary drinks and junk in 2013, but many believe the move has not decreased consumption of those foods and beverages. Meanwhile, earlier this summer, Mexico added a 16% tax to all pre-packaged and ready-made food at convenience stores.

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