November 13, 2013

Another attempt to legislate what we eat and drink? This may sound familiar. This time though, the fat tax is being levied in Mexico, where a former official says they are “a country of malnourished fatsos.”Mexico was recently named the most obese nation in the world. Mexicans are also the largest consumer of sugary soft drinks, which may be a contributing factor. Enter the Mexican Soda Tax.

Mexican Soda Tax

Can government really legislate healthy eating? It’s been tried before, including a recent attempt by New York mayor, Michael Bloomberg. You probably remember he tried to ban the sale of larger sodas in New York City. A court blocked his ban. Now, he’s funding anti-obesity ads in Mexico through Bloomberg Philanthropies.

It’s not unusual for governments to push behavior modification through the tax code. Our government has promoted some behavior (such as home ownership, charity) and discouraged others (like alcohol and tobacco use) through tax. As hated as taxes are, at least a tax is less intrusive than a ban.

What will be taxed in Mexico?

The bill adds 5% tax on some foods, but as yet there is no specific list. Instead the law says,“food that is high in calories such as fried foods… sweets, foods made mainly with cereal, among others…” The bill also adds a tax on sodas, equal to about 7.5 cents per liter. This applies to sodas having more than 275 calories per 100 grams.

Has it worked before?

The Wall Street Journal says Mexico is on the “cutting edge of government efforts to cut obesity rates. “But will it work? In general, people don’t take kindly to being told what to eat and drink. Take a look at what happened in Denmark.

In 2011, Denmark became the first country to impose a tax on fattening foods. A year later, they were the first to abolish the law. quotes the Danish tax ministry as saying “The fat tax and extension of the chocolate tax, the so-called sugar tax, has been criticized for increasing prices for consumers, increasing companies’ administrative costs and putting Danish jobs at risk. At the same time it is believed that the fat tax has, to a lesser extent, contributed to Danes traveling across the border to make purchases.”

What does this mean for America?

More than you might think. Many large Mexican and foreign food companies operate here in America, and, at least for a time, might see a drop in sales, therefore jobs, thanks to the tax. If the tax does succeed in bringing down consumption of fattening foods and drinks over the long term, it may embolden people who want to impose their values on the public, here in the United States.

Chances are, the tax in Mexico will curb consumption for awhile, but if history is a predictor, it won’t change much over time, say critics of the measure. Raul Picard, a top official of Mexico’s industrial chamber predicts it will lead to “a proliferation of contraband goods of questionable origin, possibly posing a threat to public health.” Academics in Mexico say the tax will hurt the poor the most, because they spend a greater percentage of their incomes on cheap, unhealthy but affordable, food.

Photo: International Business Times (Creative Commons)