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Mexico Ready To Back Higher Junk Food Tax

Thursday, 24 October 2013   (0 Comments)
Posted by: Authors: Dave Graham and Miguel Gutierrez
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Authors: Dave Graham and Miguel Gutierrez (Irish Independent)

Mexico's ruling Institutional Revolutionary Party (PRI) is ready to support an opposition proposal to increase a planned tax on junk food included in the government's fiscal reform.

Last week, the lower house of Congress approved President Enrique Pena Nieto's fiscal reform, at the last minute adding a measure to impose a 5pc tax on junk food.

The Senate must approve the reform by the end of the month. This week Armando Rios Piter, a Senate finance expert from the leftist Party of the Democratic Revolution (PRD), proposed increasing the tax rate on junk food to 8pc.

Asked whether the PRI could back the higher tax proposed by Rios Piter, which also aims to reduce high levels of obesity in Mexico, the party's Senate leader Emilio Gamboa told Reuters: "The PRI will undoubtedly support it."

Gamboa noted the finance committee of the Senate was still discussing the fiscal reform, and its decision on possible changes to the bill is not expected until later this week.

The tax bill is a key plank of a government reform agenda spanning energy to telecommunications that Pena Nieto hopes will boost growth in Latin America's No.2 economy.

Any changes to the bill would mean returning it to the lower house of Congress to be signed off, and would expose it to fresh attacks from the conservative National Action Party (PAN), which has waged a vigorous campaign against much of the tax reform.

If the bill is approved as revised by the lower house, government tax revenues will rise by a little less than 2.7pc of GDP by 2018, Miguel Messmacher, Mexico's deputy finance minister for revenue, told Milenio television.

That is slightly less than the nearly 2.8pc of GDP forecast previously by Finance Minister Luis Videgaray.

More fighting over the tax bill risks complicating Pena Nieto's efforts to open up the oil industry to private capital, for which the PRI is likely to rely on support from the PAN.

The PRI lacks a majority in Congress and needs a two-thirds majority for the constitutional changes Pena Nieto wants to make to foment outside investment in the state-run oil industry.


Separately, another PRI official, speaking on condition of anonymity, said the Senate was also considering expanding the basket of foods included under the junk food definition so as to reap more tax without necessarily raising the rate.

The junk food tax, which compliments a planned charge on sugary drinks, is to be levied on high-calorie foods including chocolates, sweets, puddings, potato chips and ice cream. The definition does not, however, include hamburgers and tacos. 

This article first appeared in



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