Tax on Dairy Products Has Mexican Opposition, Businesses Up in Arms
EspañolAn announcement that a special tax on dairy products has sparked controversy in Mexico, as many politicians and businessmen oppose the measure for being unfair.
On Monday, the Tax Administration Service (SAT) revealed that dairy products will be taxed for flavored beverages when they are dissolved in water, which means that there will be approximately a $0.20 tax per liter of milk with sugar.
The measure was rejected by opposition senators. Democratic Revolution Party (PRD) legislators asked that it be canceled it and the National Action Party (PAN) said that the measure was “regrettable.”
“It is a mistake to do this because at no time did you communicate with us, consult us or let us know of this position,” a statement read. “Moreover it was not in the spirit of what the legislative branch voted for.”
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PDI Legislator Armando Ríos Piter also warned the imposition could affect the people’s perception of the fight against obesity.
“The discussion has always been on the issue of soft drinks,” Pitter said. “But the extension will unilaterally generate huge discomfort in the population.”
PAN Senator Hector Larios said he rejected the dairy tax because it will affect the poor.
“It is a regressive tax,” he said. “We have tried the last three years to break it up and we will continue trying.”
“In reality these are rules based on an interpretation of a law passed in 2015 and which has no other purpose than to withdraw money with the excuse to combat obesity,” he continued. “But we have seen that it has not reduced the consumption of soft drinks or anything and if it has generated a significant amount of money.”
Meanwhile, the National Chamber of Industry of Milk said that the measure will not affect the sale of dairy products.
“The aim of the SAT is to have IEPS in sugary drinks and to protect all beverages with added sugars,” said President of the Canilec Juan Carlos Pardo. “Milk is still not affected by the IEPS … in fact even flavored milks are not taxed.
The National Association of Small Merchants (Anpec) said the dairy tax will affect Mexican pocketbooks and stores that sell goods in small quantities.
“It affects merchants because dairy is the third best-selling product, under beers and soft drinks,” President of Anpec Cuauhtémoc Rivera said. “It represents an average of up to 20 percent of small-business sales.”
Senior Analyst at Euromonitor International Mark Strobel said he agreed because the tax will impact the lowest socioeconomic groups and directly influence household consumption.
“In the case of combined dairy products, which are cheaper and more accessible to people in lower socioeconomic groups, it will have an impact,” Strobel said.
Source: El Universal