Tax Adjustment on Gasoline, Soft Drinks, and Tobacco Due to Inflationary Effects
Claudia Sheinbaum's administration has not proposed any tax increases for next year. However, there are taxes that are adjusted based on price increases. For 2025, the Ministry of Finance and Public Credit (SHCP) plans not to raise taxes such as VAT or income tax, but under legal mandates, the rates applied to soft drinks, gasoline, and cigarettes under the Special Tax on Production and Services (IEPS) will be modified according to inflation. The Ministry projects that by the end of 2024, the average inflation rate will be 4.7%, which means that the IEPS rates for each liter of soft drink and gasoline will increase by the same percentage in 2025, as will the rate applied to each cigarette. These adjustments are announced every year at the end of December.
Since 2016, adjustments to the IEPS on Magna, Premium, and diesel gasoline have been made every year. When fuel prices rise, the Ministry applies discounts to these rates to prevent final prices from skyrocketing. For the upcoming year, it seems unlikely that the Ministry will provide subsidies, as proper collection of the IEPS on fuels is one of the government’s strategies for generating revenue, according to the head of the agency, Rogelio Ramírez de la O. Throughout this year, gasoline prices have remained relatively stable, allowing the IEPS to be collected at 100%, especially for Premium gasoline and diesel, which have received less subsidy or discount.
With the inflation adjustment, the rate for Magna gasoline will increase from 6.17 pesos per liter in 2024 to 6.46 pesos in 2025. For Premium gasoline, a rate of 5.45 pesos will be applied, compared to the current 5.21 pesos. The rate for diesel will be set at 7.09 pesos per liter. As for tobacco, the cost per cigarette will be 0.6455 pesos, up from 0.6166 pesos charged in 2024. Finally, for sugary beverages like juices and soft drinks, a rate of 1.6476 pesos per liter will be applied. This IEPS, which is levied on products deemed harmful to health and the environment, aims not only to generate fiscal revenues but also to discourage consumption of these products. However, Mexico remains the fourth country in the world for soft drink consumption, with 133 liters per person in 2022, surpassed only by Belgium, Argentina, and the United States, according to data from Statista. Additionally, it is important to note that these revenues are not specifically allocated for funding health services or combating diseases such as obesity, hypertension, or tobacco use, as stated by the Center for Economic and Budgetary Research (CIEP).
In conclusion, while the adjustment of these taxes aims to balance government finances and discourage the consumption of harmful products, it is essential that the generated resources are directed towards programs aimed at public health. Health spending is one of the country's main needs, and efficient management of these taxes can help improve the quality of life for the population.
