Published On: Sat, Aug 27th, 2016

Mexico urged to double tax on sugary drinks

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The authorities in Mexico are being urged to double the tax on sugary drinks in an attempt to reduce obesity and raise revenue, the Financial Times reports.

The campaign by health advocates and senators is being watched closely by industry groups abroad after Mexico placed a 10 per cent surcharge on sugary beverages three years ago to combat an epidemic of obesity and diabetes.

Supporters of a higher tax say they are taking action because domestic sales of fizzy drinks have largely recovered following an initial drop.

In the UK, a business group formed this week to lobby against proposals to impose a sugar tax due in 2018, arguing it threatened thousands of jobs and would do little to cut consumption.



Mexico’s tax has raised about $2.5bn in revenues, more than expected. Resilient sales could invite a higher tax burden.

“It’s indisputable that this tax has taken in money well,” said Jorge Terrazas, head of the Mexican soft drink producers association, which represents Coca-Cola and Pepsi bottlers. “But it’s also clear that it hasn’t had any impact on consumption.” According to Canadean, the data service, volume sales of fizzy drinks in Mexico rose 0.5 per cent in 2015 after a 1.9 per cent drop in 2014.

Countries including Australia, Colombia, India, Indonesia, the Philippines and the UK are discussing or planning a similar tax. Coca-Cola calls such taxes regressive because they hit the wallets of poor consumers disproportionately.

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