Soda Tax Reduce Consumption in Mexico

June 17, 2015 Taxation in Mexico

MEXICO CITY – Mexico’s recent soda tax has been proven to be effective, especially among low-income earners.

According to the results of a new study conducted by the Mexican National Institute of Public Health and the University of North Carolina, the tax on the sale of sugary beverages in Mexico has had a positive and measurable effect on reducing the consumption of such drinks in the country.

The tax, which as first imposed in 2014, is levied at a rate of approximately 10 percent of the sale price of any drinks containing added sugar.

As a result of the 10 percent tax the consumption of sugary drinks has fallen by an average 6 percent over the course of 2014.

Further, the tax had a significant effect on the consumption patterns among low-income earners, with the purchase of sugary drinks falling by as much as 17 percent.

It was also shown that the tax led to a 4 percent increase in the sale of beverages which remained untaxed, such as diet sodas, juices, unsweetened drinks, and water.

It is estimated that diet plays a significant negative role on the national economy, with those suffering from diabetes spending nearly USD 300 more per year on medical care than they earn per year, leaving a significant financial burden on the national health system.

Photo By: Erin Pettigrew