Tax Hikes Insufficient to Curb Consumption of Harmful Products

Mexico City — Civil society organizations have warned that the proposed fiscal reform regarding the Special Tax on Production and Services (IEPS) is insufficient to reduce the consumption of products harmful to health and, conversely, could open the door to the indirect legalization of vapers and other nicotine devices.

In a joint statement, Salud Justa Mx and the Coalition México SaludHable—which groups more than 60 organizations—called on legislators to adjust the bill in line with international recommendations on health taxes.

Among their primary observations, they highlighted that the proposed tax on cigarettes does not meet the standard suggested by the World Health Organization (WHO), which recommends a minimum levy of 3 pesos per cigarette.

Likewise, the NGOs warned that by including taxes for products with nicotine, the initiative "could indirectly legalize vapers," despite the fact that their commercialization is prohibited by a ruling of the Supreme Court of Justice.

The organizations also alleged that the bill would allow the legal market entry of novel products such as nicotine pouches and heated tobacco. They further stated that the proposed scheme would generate an unconstitutional double taxation that could give the tobacco industry room to evade payment.

"It is positive that an increase in the ad valorem tax—a levy calculated as a percentage of the value of a good, service, or transaction—from 160% to 200% for cigarettes and other tobacco products is contemplated, as well as annual increases to the specific IEPS between 2026 and 2029," the statement said.

Similarly, the entities pointed out that betting on the most cost-effective policy to reduce consumption "is a success that comes from the proposal presented by President Claudia Sheinbaum."

However, they considered it unacceptable that the initiative does not include an increase in the tax on alcoholic beverages, which—they estimate—cause approximately 42,000 deaths per year and generate social and health costs of 552 billion pesos.

The organizations called on the Senate to correct the bill before its final approval within the framework of the discussion of the 2026 Economic Package.