Background on the Mexican Government’s Actions
The Mexican government has once again taken aim at transnational corporations, this time expanding its offensive to include a broader range of industries. In the initial phase, prior to the pandemic, the government targeted pharmaceutical companies and manufacturers of herbicides and pesticides, causing ripples across various economic sectors.
Current Focus: Beverage, Food, and Nutritional Supplement Manufacturers
The government now seeks to protect the health of Mexican citizens, according to federal authorities. In this second round—the first led by then-deputy health secretary Hugo López Gatell—the scope of action is broadening. The manufacturers of beverages, dairy products, soups, sauces, condiments, and bread are under scrutiny. Additionally, those who produce oral electrolytes and energy drinks are also in the crosshairs.
Tax Implications and Revenue Generation
The proposed taxes aim to generate more revenue for the treasury. By extending the Impuesto Especial sobre Producción y Servicios (IEPS) to a diverse range of products, the government hopes to increase tax revenue from items widely available in retail stores. Secretary of Finance, Édgar Amador Zamora, has expressed enthusiasm for the proposal by the Green Party (PVEM) and Party of the Democratic Center (PT) to tax products like Electrolit and similar beverages, which would bring in over 5,000 million pesos to public coffers.
Proposed Restrictions on Energy Drinks
Ricardo Monreal Ávila, leader of the majority morenista bloc in the Chamber of Deputies, has already proposed a reform to the General Law of Health that, if approved by the Plenary, would prevent minors from acquiring and consuming any non-alcoholic beverage containing caffeine, taurine, guaraná, ginseng, vitamin B group, glucuronolactone, or other stimulants, along with sugars, sweeteners, and other additives.
Previous Targets vs. Current Expansion
Earlier, the government targeted Monsanto and The Coca-Cola Company. Now, however, the scope has widened to include Tate & Lyle, Cargill, Perfetti, Ajinomoto, and other sweetener manufacturers who will face an uphill battle in terms of public opinion.
Effectiveness of Past Measures and New Proposals
Experts will leverage their data to argue against the new taxes. Since the implementation of IEPS on sugary beverages in 2014, the average consumption of soft drinks per person in Mexico has remained stable. However, the prevalence of diabetes and obesity has grown steadily. The economic policy general criteria acknowledged by the Secretariat of Finance show that the consumption of flavored beverages remains high and has contributed to three-quarters of the population over 20 years having excess weight or obesity, while tobacco consumption is associated with 63,000 annual deaths. The medical care cost resulting from diseases linked to these products is 116,000 million pesos.
Future Health Tax Model
To implement the “Healthy Republic” model, tax policy also plays a crucial role. Starting in 2026, health-related taxes will be established to discourage the consumption of products affecting the physical and mental health of the population. The proposed Ley de Ingresos 2026 includes updating the quota applied to flavored beverages, including those with any type of non-caloric sweeteners.
Scope of Products Under New Health Taxes
Beyond tobacco and soft drinks, the list of products subject to new health taxes spans a wide range, including: jellies, chewing gum, vitamins; light or zero-calorie beverages, flavored waters, low-calorie juices, sugar-free energy drinks, ready-to-drink teas; low-fat yogurts, sugar-free milk, low-calorie lactose products; cookies, bread; chocolates and sweets without added sugar.
Low-Calorie Sweeteners and Contradictory Policies
Products using low- or no-calorie sweeteners would be subject to the IEPS outlined in the economic package proposal. The policy of strengthening health measures through taxation contradicts the logic of encouraging healthier alternatives.
Scientific Evidence and Regulatory Consistency
The scientific and regulatory evidence is consistent: low- or no-calorie sweeteners are safe and helpful in reducing sugar intake, supporting those managing their weight or conditions like diabetes. Penalizing their consumption will not improve the health of Mexicans.
Key Questions and Answers
- Who is the Mexican government targeting with these new taxes? The government is targeting beverage, food, and nutritional supplement manufacturers, including those producing oral electrolytes and energy drinks.
- What is the goal of these new taxes? The primary objective is to generate more revenue for the treasury and discourage consumption of products affecting public health.
- How effective have previous tax measures been in improving public health? Despite the implementation of IEPS on sugary beverages in 2014, average soft drink consumption per person has remained stable. However, diabetes and obesity prevalence have continued to rise.
- What products will be subject to the new health taxes? The list includes jellies, chewing gum, vitamins; light or zero-calorie beverages, flavored waters, low-calorie juices, sugar-free energy drinks, ready-to-drink teas; low-fat yogurts, sugar-free milk, low-calorie lactose products; cookies, bread; chocolates and sweets without added sugar.
- Are low-calorie sweeteners being discouraged by these new taxes? Yes, products using low- or no-calorie sweeteners will be subject to the IEPS, which contradicts the goal of promoting healthier alternatives.
