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Mexico's lower house of Congress approves new taxes on junk food

Laws and LegislationCrime, Law and JusticeU.S. CongressMichael BloombergPolitics

MEXICO CITY — It may soon cost more to get fat in Mexico.

New taxes on high-calorie junk food and sugary drinks were approved by Mexico’s lower house of Congress in a marathon 18-hour session that ended Friday morning. They are part of a broader package of taxes and other fiscal changes proposed by President Enrique Peña Nieto aimed at generating nearly $20 billion for the national treasury.

Mexico has one of the world’s highest rates of obesity, recently surpassing the United States, and bigger price tags on chips, candy and other chatarra – or junk food – are being applauded by health experts. However, they are being panned by many in the business community. Opponents liken the effort to the crusade by New York City Mayor Michael Bloomberg to tax soft drinks, which has also met stiff resistance.

“It will hurt,” said Eusebia Blas Luna, 50, who has been selling candy bars and Cokes chilled by blocks of ice out of a tiny stand on Mexico City street corners for 20 years.

“Sales will fall, people will stop buying. It hurts them too,” she said. “They say this stuff isn’t good for you, but everyone gets a craving.”

The taxes are “a cruel way to take away the little pleasure we can give our kids,” said Juan Torres, 55, who makes a living watching parked cars for a few pesos. “How do you tell your children you are so poor you cannot give them a little soft drink?”

A generation ago, the country’s greater problem was malnutrition, and while such deficiencies certainly continue to exist, a larger middle class adopting some of the most lamentable consumption habits of the country to the north has puffed up waistlines and padded hips.

The legislation taxes high-calorie junk food at 5% of its ticketed price and chewing gum at 16%. Soft drinks would go up in price one peso per liter.

The upside of making junk food and high-sugar drinks more expensive – and reducing their consumption – is the obvious health benefit. According to the United Nations' Food and Agriculture Organization, 32.8% of Mexican adults are obese, and obesity-related diabetes is now the leading cause of death. Though some countries like Samoa and Nauru have a greater percentage of obese adults, Mexico’s is the highest among large countries. In the United States, 31.8% of adults are obese, the FAO says.

“The eyes of the world are focused on Mexico,” the World Health Organization said, calling for passage of the taxes in one of the many full-page newspaper ads published this week to focus attention on the issue. Warning that Mexico was dealing with an “epidemic of obesity and overweight,” the WHO urged that the taxes be even higher.

In a long, contentious session, Mexico’s Chamber of Deputies overwhelmingly approved the tax package on votes from Peña Nieto’s Institutional Revolutionary Party, joined by leftist factions that were grateful that the government’s original plan to place a value-added tax on food and medicines was dropped. The right-wing National Action Party, which is particularly attuned to the concerns of big business, voted against the measure.

A similar vote breakdown is expected when the package goes to the Senate, making it likely the legislation will be enacted.

The overall fiscal-reform package has been widely criticized for the burden it places on the middle class while treading gingerly on the wealthiest, for whom the taxation rate was raised only slightly. Mexico has the lowest tax-collection rate of the developed world.

Most of the organized opposition to the junk food and soda taxes has come from a large coalition of business groups that argue that reduced sales will eventually lead to lost jobs -- not to mention diminished profits.

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wilkinson@latimes.com

Copyright © 2014, Los Angeles Times
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Laws and LegislationCrime, Law and JusticeU.S. CongressMichael BloombergPolitics
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