Mexico wants the fourth place
On September 8, in an attempt to curb obesity, the Mexican government proposed a
one-peso tax (eight cents) for every liter of sugar-sweetened beverages . This way, Mexico
follows Denmark , Hungary and France, and could become the fourth country to establish
a tax of this kind. According to a 2012 national survey , almost a third of Mexican adults
are obese, while nearly 40% are overweight, making it the fattest industrialized nation .
The government, as well as some NGOs, argues that the tax will increase soft drinks
prices, resulting in a decrease of their demand and a shift toward healthier products. At the
same time, they want the revenue collected to be use in preventive campaigns. It may look
like a great policy, but in my opinion it will not work here are four reasons why:
1) Bottled soda is the sixth most important product between foods and beverages for the
average Mexican household, with 1.14% of the income being spent on it; milk has a share
of 1.44% and beer occupies the first place with a share of 1.59%. Beer is harmful and is
already highly taxed but still widely consumed, what would make soft drinks different?
2) For low-income families, soft drinks represent a necessity that provides cheap calories
relative to healthier, more expensive products. The demand for soft drinks for these
families is more inelastic to changes in price than for other households, meaning they will
keep buying them. Therefore, the tax will strike them harder, making it regressive.
