The industry questions the effectiveness of the sugary drinks tax
The levy was established in 2014 to discourage consumption of high-calorie products in the face of the obesity epidemic that exists in Mexico.
Diabetes is one of the main health problems in Mexico, one of the most obese countries in the world. The executive proposed in September 2013 to impose a tax deterrent to the consumption of beverages with a high caloric content to combat this disease, which caused more than 94,000 deaths and became the second cause of death in 2014, according to official data. The refreshment industry has questioned the effectiveness of the levy and has ensured that it is tried to unfairly blame producers for the prevalence of type 2 diabetes, the most common variant and whose epidemiology is associated with both genetic factors and poor dietary habits and sedentary lifestyle .
“The effects are practically zero with respect to the objectives set by the government three years ago,” says Jorge Terrazas, director general of the National Association of Producers of Refreshments and Carbonated Waters (ANPRAC). The application of the Special Tax on Production and Services (IEPS) to these goods came into force in 2014, following a presidential initiative to levy a peso ($ 0.05) per liter sold on sugary drinks, as well as powders , Syrups and concentrates with a high caloric content. The IEPS is an indirect tax, which producers and importers transfer to consumers by including it in the final price of the product.
The measure is part of the strategy that the executive presented at the beginning of the six years for the control of obesity and diabetes. “It seeks to discourage the consumption of empty calories, which is expected to reduce the incidence of obesity and overweight, particularly among children,” said Finance Secretary Luis Videgaray at the time of the proposal. The plan includes several fronts: the educational, the advertising and the prosecutor, but the results are still uncertain.
The refreshment branch considers that, although the tax burden is 30% when adding IEPS and Value Added Tax, consumption has remained intact. In Mexico, 9.2 million liters of soft drink were sold until June 2016, according to ANPRAC data. The figure is slightly higher than the volume presented by the association for the same period of 2015, 9 million liters. “The tax would be more effective as long as it was complemented by information campaigns, consumption should be moderated,” says Marcela Vega, academic manager of the Mexican Diabetes Federation (FMD).
The National Public Health Institute notes, unlike ANPRAC, that soft drink consumption fell by 11% during the first half of the year. Until last June, the collection of IEPS in flavored drinks increased by 15.2% in real terms compared to the same month in 2015, while in beer and soft drinks fell by 0.8%, according to data from the Ministry of Finance .