When raising taxes on cigarettes becomes the best business plan for organized crime
It seems that the government has discovered a magic formula to finance itself, and oh, surprise, it involves reaching into the pockets of smokers. But here’s the plot twist that no one saw coming (or yes, we all saw it): the recent increase in the IEPS on cigarettes is turning out to be the best strategic ally that organized crime could have had. That’s right, while legislators pat themselves on the back thinking about raising more, the mafias rub their hands with a growth in illicit trade of 240% between 2017 and 2023. Someone should explain to them the concept of “unintended consequences”, but in a simple way, so that they understand it.
Gerardo Cleto López Becerra, the president of the Council for the Development of Small Commerce and Family Business (or ConComercioPequeño, for the folks), said it bluntly: “there is no such thing as a healthy tax.” And he is right, because since they implemented this tax, the number of smokers has not decreased significantly, but what has skyrocketed was the parallel market. It’s like when they raise the price of gasoline and suddenly everyone knows a cousin who sells “cheaper” fuel of dubious origin. The logic is the same, only here we are talking about packs.
From the corner store to the cigarette drug dealer
Imagine this scene: you go to your favorite formal establishment and a legal pack costs you almost 100 pesos (yes, that figure made us frown too). Then, they go around the corner and the street store offers the same amount of cigarettes for 20 pesos. Guess which option the average Mexican trying to make ends meet chooses? The calculation is simple and depressing: it’s the difference between having breakfast or getting a hit of “cheap” nicotine.
But this is not just a price issue, it is a systematic invasion. López Becerra explains how organized crime has tightened its extortion practices against established merchants to force them to sell illegal products. Basically, they are offering them “protection” and an assortment they didn’t ask for: more than 250 pirate brands have flooded the country since 2010. It sounds like those illegal Amazon marketplaces, but with more violence and fewer return options.
The favorite brands in this peculiar criminal catalog respond to names like Marble, Denver, Indigo, Royal, Time and Carnival. They sound like perfumes of dubious quality or provincial electronic music festivals, but no, they are the cigarettes that organized crime produces and distributes as if they were limited editions. And although the problem is national, there are states where the situation is particularly alarming: Nuevo León, Coahuila, Tamaulipas and Yucatán are the places where this business flourishes most vigorously. Wow, even for smuggling there are favorite tourist destinations.
Behind these figures there is an entire economic ecosystem that is affected. We are talking about more than 1.2 million small stores, groceries, miscellaneous and supermarkets that could see their legitimate sales plummet. These small businesses are the soul of the neighborhoods, the place where you buy your cigarettes, your soft drink and even where you ask the shopkeeper how his son did at school. They are the thermometer of the real economy, not those abstract statistics that officials manage from their air-conditioned offices.
The illusion of the healthy tax and why it is backfiring on us
The official narrative insists on painting these increases as “healthy taxes”, a kind of economic punishment for having bad habits. But the reality is that this fundraising strategy is proving to be more harmful than beneficial. Instead of discouraging consumption, what it does is transfer smokers to economic circuits outside the law, feeding precisely the criminal structures that the State claims to combat so much.
It is the equivalent of wanting to put out a fire with gasoline: the more taxes on legal products rise, the more competitive the illegal ones become. And here there are no prevention campaigns that are worth it when the pocketbook rules. The average Mexican, the one who survives from day to day, cannot afford the luxury of fiscal patriotism when the price difference is abysmal.
The representative of small businesses has made a direct call to the federal deputies who are analyzing the economic package for 2026: do not approve this increase. It is not just a question of numbers, it is understanding that each fiscal measure has a direct social impact. When a public policy benefits criminals more than citizens or the treasury, perhaps it is time to completely rethink it.
In the end, this scenario leaves us with a civic lesson with a bitter taste: sometimes good intentions (or what they sell us as such) pave the way to the hell of the black market. And while legislators debate in their bubbles, in the streets the informal economy continues its course, adapting and growing with an efficiency that any entrepreneur would envy. The problem is that this “company” does not pay taxes, but it does finance weapons, extortion and violence.
Are you surprised by how tax policies can unintentionally strengthen organized crime? Share this analysis on your social networks and let’s make this absurd paradox visible. Explore more content related to the informal economy and public policy on our site to understand all the angles of this complicated national puzzle.
