Background on the Instituto Politécnico Nacional (IPN)
The Instituto Politécnico Nacional (IPN) is a prestigious public engineering and technological university in Mexico. Established in 1936, it plays a significant role in research and higher education. The IPN’s Centro de Investigaciones Económicas, Administrativas y Sociales (CIECAS) conducted a study revealing the alarming growth of the illegal cigarette market in Mexico.
The Rising Illegal Cigarette Market
According to the IPN’s study, the illegal cigarette market now accounts for 28% of total consumption in Mexico, a figure that has tripled over the past eight years. This translates to an annual loss of approximately 26,700 million pesos in tax revenue.
- Three out of every ten cigarettes consumed are now illegal.
- Over 11 billion illegal cigarettes were consumed in 2025 alone, none of which adhered to current regulations or paid the required taxes.
Despite stable smoking rates in Mexico over the last decade and increasing legal taxes on tobacco products, the illegal market continues to expand.
Government’s Proposed Tax Increases
In September 2022, the federal government proposed raising tobacco taxes as part of the 2026 Economic Package. The ad valorem tax rate is set to increase from the current 160% to a proposed 200%, affecting not only cigarettes but also nicotine bags and hand-rolled cigars. This increase will be implemented gradually until 2030.
“The illicit trade of cigarettes represents a step backward in tobacco control policies in Mexico, as the low cost and easy access to illegal cigarettes encourage consumption, undermines the effectiveness of laws and law enforcement, and weakens fiscal policy,” stated the IPN study.
Study Findings and Impact on Legal Brands
The IPN’s CIECAS analyzed 9,125 cigarette packs collected from eleven cities across Mexico. Eight of these cities saw a doubling of illegal consumption compared to an Instituto Nacional de Salud Pública (INSP) report from 2023.
- Cities with the highest illegal cigarette sales include Guadalajara (49%), Monterrey (46%), and Mérida (37%).
The growing illegal market has displaced established brands, further impacting the legal tobacco industry.
Key Questions and Answers
- What is the IPN? The Instituto Politécnico Nacional (IPN) is a prominent public engineering and technological university in Mexico, known for its research and higher education contributions.
- What percentage of cigarette consumption is now illegal in Mexico? The illegal market accounts for 28% of total cigarette consumption in Mexico.
- What tax increases were proposed by the federal government? The federal government proposed raising ad valorem taxes on tobacco products from 160% to 200%, affecting cigarettes, nicotine bags, and hand-rolled cigars. This increase will be implemented gradually until 2030.
- Which cities have the highest illegal cigarette sales? Guadalajara, Monterrey, and Mérida have the highest rates of illegal cigarette sales at 49%, 46%, and 37% respectively.
