Mexico’s Tax Hike to Fuel Crime, Job Losses

Mexico City — Representatives from the business and social sectors expressed widespread rejection of the proposed increase to the Special Tax on Production and Services (IEPS) on sugary beverages, cigarettes, video games, and casinos, put forward by the Executive Branch as part of the 2026 fiscal package.

During a working meeting with the Finance Commission of the Chamber of Deputies, chaired by Morenista Carol Antonio Altamirano, they warned of adverse effects from the tax increase, including job losses, growth of the informal economy, and the expansion of a black market controlled by organized crime.

Tobacco Industry Warns of Illicit Market Dominance

The president of the National Tobacco Industry Council, Gastón Zambrano, emphasized that the special tax increase on cigarettes would mean an additional 15 to 17 pesos per pack of twenty units, reaching a public price of 100 pesos.

“If this tax increase is consolidated and voted in favor, the leader of the cigarette market will be organized crime, (as) the illicit cigarette market will reach 50 percent next year,” he warned.

He argued that the legally established industry cannot sell its full portfolio of cigarettes in more than 250 municipalities across the country, as criminal organizations arrive one day, deliver 10 packs to points of sale, and return the next day for the money.

Soft Drink Tax Would Affect the Consumer, Warn Business Leaders

The president of the National Chamber of Commerce, Services, and Tourism of Mexico City, Vicente Gutiérrez Camposeco, stated that the tax on sugary beverages is a “failed tax” and harms the consumer, as 85 percent of sales from over a million small stores, which generate two million jobs, correspond to soft drinks and sugary beverages, which would affect the local and family economy.

Andrés Massieu Fernández, of the Mexican Beverage Association, stated in turn that the special tax on soft drinks “is neither healthy, nor effective,” as, he said, these products contribute only five percent of the calories consumed by Mexicans and there is no direct relationship between the intake of flavored beverages and obesity, overweight, and diabetes.

Representing the Pascual Cooperative, Salvador Torres emphasized that the IEPS on flavored beverages would increase from 1.64 to 3.06 pesos, which in his opinion represents a disproportionate increase of 87.3 percent that would severely impact job creation across the entire production chain.

Details of the Meeting Between Deputies and Business Owners

On behalf of the National Alliance of Small Merchants (Anpec), Cuauhtémoc Rivera reproached the legislators for turning their backs on those they seek during campaigns to ask for their votes and stated:

“The quality of people's consumption will fall or decrease further, it will reduce consumption by 15, 20 percent in stores through direct and indirect sales, it will lead to the closure of at least 60 thousand small businesses in the country, which are hanging by a thread, and 120 thousand self-employment jobs will be lost,” he remarked.

Job Losses, a Potential Risk

Pierre Claude Blaise, of the Mexican Online Sales Association, explained that only 10 percent of companies in Mexico sell online and said that the proposed fiscal measures for 2026 threaten to stall the engine of growth with the potential exit of one third of digital SMEs and the loss of 150 thousand formal jobs.

Alfonso Pérez Lizaur, of the Association of Game and Lottery Permit Holders and Providers, emphasized that the casino and lottery sector contributes around 42 billion pesos to the formal economy and the financing of public policies, but the tax increase would be an incentive to seek informal alternatives and would encourage unfair competition.

Orlando Pérez, of the Mexican Interactive Entertainment and Video Game Association, assured that the eight percent tax on video games could negatively impact the development of the national industry. He specified that 61.4 percent of the population uses video games, representing more than 72 million people.