Mexico May Soon Tax Junk Food
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, the PRI’s leader in the Senate said on Wednesday.
Last week, the lower house of Congress approved President Enrique Peña Nieto’s fiscal reform, at the last minute adding a measure to impose a 5 percent 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 8 percent.
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.”
According to a report in Los Angeles Times, 32.8 percent of adults in Mexico are obese. In addition, one of the leading cause of deaths are obesity-related diseases. In comparison, the obesity rate in the U.S. is 31 percent.
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 Peña 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 2.7 percent of GDP by 2018, Miguel Messmacher, Mexico’s deputy finance minister for revenue, told Milenio television.
That is slightly less than the nearly 2.8 percent of GDP forecast previously by Finance Minister Luis Videgaray.
More fighting over the tax bill risks complicating Peña 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.
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