Will Soda, Junk Food Black Market Flourish in Mexico?

The new obesity tax adds fees to sugared beverages and other snacks.

January 15, 2014

MEXICO CITY – If you tax it, a black market will soon flourish. That’s the general consensus among Mexican wholesalers and other distributors of sugar-sweetened beverages and junk food as the country’s tax on soda and junk food commences, the International Business Times reports.

“It will be the same with liquor and cigarettes,” said Inaki Landavuro, president of the National Association of Wholesale Sellers (ANAM). He pointed to the fact that only 800 of the 2,800 liquor manufacturers pay taxes. “Producers and distributors will start taking cash, instead of issuing receipts, to avoid the higher tax.”

Some worry that the tax will lead to lower sales in the food and beverage sector, which jumped 7% in volume, but not revenue, last year. Sales reached $12 billion, mostly because Mexicans purchase food daily from independent, neighborhood stores.

The Mexican government passed the tax as a way to curb obesity in the country. The tax hiked the price of soft drinks by 7 cents and junk food by 8%. The tax has been received with boos from citizens, fast-food restaurants, and soft drink bottlers.

Other countries and cities toying with a tax on soda include the United Kingdom and San Francisco.

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