Introduction to the Tequila Industry’s New Fiscal Proposal
The National Chamber of the Tequila Industry (CNIT) continues to advocate for a new tax scheme that aims to establish an “even playing field.” This proposal suggests calculating the IEPS (Impuesto Especial sobre Producción y Servicios) based on the alcohol content of beverages, applying a fixed quota per alcohol degree without considering the product’s price.
Understanding the Current Tax System
Currently, the IEPS is calculated based on the beverage’s price, with rates depending on alcohol content. For products with over 20% alcohol content, such as tequila, a 53% tax rate is applied based on the beverage’s value.
According to Ana Cristina Villapando, General Director of CNIT, “A bottle that costs 56 pesos at OXXO, whether it’s a low-quality agave distillate or not, pays the IEPS on that price and another 1,000 pesos on top of that, even though they have the same alcohol content.”
The Rationale Behind the New Proposal
Villapando explained that the tequila industry has been promoting a fiscal model change for years, so all alcoholic beverages have their taxable base based on alcohol content. This “Ad Quantum” model is applied in the most developed countries worldwide.
When asked why tequila and other alcoholic beverages were not included in “healthy taxes,” Villapando clarified that the markets for sugary and alcoholic beverages are different and should have distinct fiscal treatments.
Key Questions and Answers
- What is the current IEPS calculation based on? The IEPS is currently calculated based on the beverage’s price, with rates depending on alcohol content.
- What is the proposed change by CNIT? CNIT proposes calculating IEPS based on alcohol content, applying a fixed quota per degree of alcohol without considering the product’s price.
- Why is this change necessary? The current system creates an uneven playing field, as products with the same alcohol content but different prices are taxed differently.
- What is the “Ad Quantum” model? The “Ad Quantum” model bases taxes on the quantity or volume of a product, rather than its price. It’s used in many developed countries.
- How would this new system impact tequila prices? This change could potentially make lower-priced, lower-quality tequilas pay the same taxes as higher-priced, high-quality tequilas, promoting fairness in the market.
The Tequila Industry and Its Relevance
The tequila industry is a significant contributor to Mexico’s economy, generating over 200,000 direct and indirect jobs. Tequila is not only a popular spirit worldwide but also holds Appellation of Protected Designation of Origin (AODO) status, ensuring its production adheres to strict quality and geographical standards.
The National Chamber of the Tequila Industry (CNIT) represents over 120 tequila-producing companies, making it a crucial voice in shaping Mexico’s fiscal policies related to tequila and other alcoholic beverages.
Impact on Consumers and the Market
If implemented, this new tax scheme could lead to more uniform pricing among tequila brands with similar alcohol content. Currently, lower-priced, lower-quality tequilas may have an unfair advantage due to lower taxes compared to higher-priced, high-quality tequilas.
This proposed change aims to create a fairer market, encouraging consumers to consider quality rather than just price when choosing tequila. It could also potentially increase government revenue from the tequila sector, as higher-quality tequilas often command higher prices.
