coca-cola Soft drinks will generate more tax revenue.

Soft drink, snack tax to boost revenues

Finance Secretariat forecasts an increase of 130% next year

A proposed tax hike on high-calorie food and drink products would raise billions of pesos in extra revenue – but critics say it unfairly targets the poor.

The increase in the Special Tax on Products and Services (IEPS), presented to Congress in the budget package last week, is predicted to boost revenues from the tax by 130%, said Leobardo Brisuela Arce, president of the Mexican Institute of Public Accountants (IMCP).

According to the Finance Secretariat, the augmented IEPS would raise an estimated 363 billion pesos in 2016, up from 159 billion this year.

“This is a very important figure because we are predicting a 250-billion-peso decrease in income tax revenue while IVA [the value-added tax] is predicted to grow by just 30 billion pesos next year,” said the IMCP head.

The IEPS currently applies to certain fuel products as well as tobacco, alcoholic beverages and food and soft drinks with a high calorie content, such as snacks and soft drinks.

The head of the Business Coordination Council (CCE), a business advocacy group, said it is hoped that the new tax will target food and drink products with a high calorie content. The point is for the tax to reduce the calorie index, which it is not currently doing, said Gerardo Gutiérrez Candiani, adding that the government must introduce measures to encourage industry to reduce the fat content of food products.

“This is not about having an impact on public finances, it’s about seeing if we can have a favorable impact on industry and consumers,” he stressed. “These are the kinds of policies that we are looking for.”

Candiani plans to make a counterproposal to the proposed 2016 budget.

Meanwhile, the president of the Confederation of Industrial Chambers, Manuel Herrera, said the proposed tax increase would be unfairly prejudiced against the poorest members of society, who are more likely to consume high-calorie food and drink products. He, too, felt that the existing tax had not succeeded in reducing calorie intake among consumers.

Source: Milenio (sp)

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