Mexico weighs doubling sugar tax on sugary drinks

Health advocates in Mexico are recommending the government double the tax on sugary drinks to curb rising obesity and at the same time raise revenue.

Supporters of a higher levy on sweetened beverages say that the 10% surcharge initially placed on fizzy drinks three years ago have had no effect on its consumption and industry sales.

Mexican government has taken in about $2.5bn in revenue since the surcharge was introduced, more than they had expected.

“It’s indisputable that this tax has taken in money well,” said Jorge Terrazas, head of the Mexican Soft Drink Association, which represents companies like Coca-Cola and PepsiCo, among others.

“But it’s also clear that it hasn’t had any impact on consumption,” he said.

According to the Canadean, the global market research company, volume sales of soft drinks in Mexico rose 0.5% in 2015 after a 1.9% drop in 2014.

Other countries such as Australia, Colombia, India, Indonesia, the Philippines, South Africa and the UK are weighing or planning the introduction of similar levy on sugar sweetened beverages. Coca-Cola, the soft drink giant says such taxes hurt poor people more than it helps, calling it regressive.

Armando Rios Piter, a Mexican senator argues that the higher tax could help fund better drinking water for the people.

“What you don’t want, if you’re defending the interests of the poorest and the most marginalised, is for them to consume something that ends their lives,” he said. “We need to give them an alternative,” he said.

According to data from the International Diabetes Federation, 15% of Mexicans over the age of 20 have Type II diabetes and adult Mexicans are twice as likely to have diabetes as the world average. In addition, 30% of Mexican children and 70% of adults are overweight.

The soft drink industry argues it should not be made a scapegoat for causing diabetes as there are other products that are equally culpable. However, many governments now see the appeal of raising revenue and at the same curbing rising obesity which has spiked health cost in many countries irresistible.

The World Health Organization said in January that governments should tax sugary drinks to curb rising obesity, citing research from Mexican health officials and the University of North Carolina.

As the debate continues on how effective levies are in curbing consumption of sugary drinks, Euromonitor data show that Mexicans drank an average of 132.9 litres of soft drinks in 2015 versus 139.4 litres in 2013, while in Chile, which also has a levy on sweetened drinks, consumption has remained unchanged at 140.4 litres per capita in 2015.

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