Health authorities and legislators analyze tax reform for products with an impact on health
In a strategic move for the country’s fiscal and health policy, the Secretary of Health, David Kershenobich, together with the undersecretary Eduardo Clark, held a working meeting with the parliamentary coordinator of Morena in the Chamber of Deputies, Ricardo Monreal. The meeting, held this morning, had as its central focus the discussion on the modification to the Special Tax on Production and Services (IEPS) applicable to soft drinks, cigarettes and other items classified as “healthy taxes“.
The relevance of this meeting was evident when Monreal shared on his This statement anticipates significant changes in the tax structure for the next fiscal year.
Technical details of the IEPS reform
The reform opinion to the IEPS Law that will be submitted for discussion in the Plenary Session of the Chamber of Deputies contemplates substantial modifications in the applicable taxes. For sugary drinks, an 87% increase in the tax is proposed, a measure that seeks to discourage the consumption of these products associated with health problems such as diabetes and obesity. In the case of manufactured tobacco, the reform proposes an even more drastic increase, going from 160% to 200% in the tax burden.
The tax reform proposal extends its scope beyond the products traditionally subject to these taxes. For draws and games with bets, an increase is contemplated that would take the rate from 30% to 50%. In particular, a specific tax for violent video games is introduced for the first time, with a proposed rate of 8%. This expansion of the tax base represents a significant change in the Mexican tax architecture.
From a technical perspective, these corrective taxes are part of a comprehensive public health strategy that seeks to internalize the social costs associated with the consumption of these products. The economic theory behind these measures maintains that prices should reflect not only production costs, but also the negative externalities they generate, such as increased health spending and loss of labor productivity.
International context and evidence on healthy taxes
Mexico is not a pioneer in the implementation of this type of fiscal measures. Various nations have established specific taxation for products with proven adverse effects on health. The World Health Organization (WHO) has consistently recommended the use of fiscal instruments as an effective tool to reduce the consumption of tobacco, alcohol and sugary drinks. Epidemiological studies show that price increases through taxes constitute one of the most effective measures to reduce demand, especially among younger consumers and the most vulnerable socioeconomic groups.
International experience with taxes on sugary drinks shows encouraging results. In countries such as Chile and the United Kingdom, the implementation of similar levies has resulted in significant reductions in consumption, with the corresponding potential benefit in public health indicators. The Mexican case is particularly relevant given the high prevalence rates of non-communicable diseases associated with these consumption patterns.
From a collection point of view, these tax revenues could be used to strengthen the public health system, creating a virtuous circle where the resources generated by the consumption of harmful products finance precisely the care of the diseases they cause. This approach responds to the principles of horizontal and vertical equity in tax matters, where those who generate greater social costs contribute to a greater extent to their financing.
The economic analysis of these measures must consider both the price elasticity of demand and the possible regressive effects of consumption taxes. While tobacco products tend to have relatively inelastic demands, sugary drinks may show greater sensitivity to price variations, which would explain the difference in proposed tax rates. However, public policy makers must carefully balance health objectives with social equity considerations.
This afternoon’s parliamentary discussion will mark a turning point in Mexican fiscal policy and its articulation with public health objectives. The result of this vote will determine not only the tax structure for 2026, but also the direction the country will take in the prevention of chronic non-communicable diseases, one of the greatest health challenges of the 21st century.
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