Mexico's Congress Approves Junk Food Tax
Last Friday morning, while we Americans were waking up with dreams of camping trips to newly un-furloughed national parks dancing in our heads, our neighbors to the south were rising from their sleep into a brave new world of wide-ranging government protectionism in the form of a comprehensive plan to tax high-calorie junk food and sugary drinks.
Michael Bloomberg, eat your heart out.
The plan -- approved in Mexico's lower house of Congress after a marathon 18-hour session, and likely to be passed into law shortly -- calls for a 5% tax on high-calorie junk food, raising the price of soft drinks about one peso (a dime in U.S. currency) per liter. The tax essentially moves "junk food" into the "sin tax" category generally reserved for adult-oriented items like cigarettes and alcohol. Reactions about this news are, as you'd imagine, quite mixed.
Against the move, predictably, is the group that stands to lose the most income from the proposed taxes:
The industry's reaction has been apoplectic. In full-page ads in national newspapers it has argued that the tax is regressive and "satanises" soft drinks, which it claims do not cause obesity. With a hint of xenophobia, the lobbyists call it the "Bloomberg tax."
Let's go ahead and highlight that one more time. "Satanizes." As in, these new taxes make people believe soft drinks are in the same category as Satan. Great job there, wizards of propaganda. Not over-the-top in the least. But certain folks are peppering their complaints about the new taxes with tiny bits of seemingly reasonable issues to consider:
"I'd like to know who's going to determine what's junk food and what isn't junk food," [the president of the National Confederation of Chambers of Commerce] said.
With cigarettes or alcohol, the classification's simple. With food, an item that our body needs to survive, who will be placed on the committee that decides which foods are "good" and which "evil"? For the particular legislation just passed in Mexico, the working definition is that foods that "provide 275 calories or more per 100 grams" are considered high-calorie. Those are the ones that will get hit with the 5% tax. (The one exception being chewing gum, which will get hit even harder by the proposals with a whopping 16% tax.) But who is to say that this definition will be the one used once the law takes shape? Or that it will remain the same definition from here on out? The shifting scale of just what constitutes junk, and the fight of food lobbyists to keep from being defined as such, will be a particularly nasty battle to pay attention to.
Another argument being lobbed is whether or not this tax is really going to help all that much anyway:
Emilio Herrera, director of Anprac, the trade association representing the $15 billion soft drink industry here, said a tax would not do any public good because people would simply switch to homemade sweet drinks.
Fair point. But also, the description of his job is practically in theater marquee lights. Seems like an argument one should be extremely skeptical when considering. Especially when, in the next paragraph of the afore-linked New York Times piece, there's a direct counter to it:
Arantxa Colchero Aragones, a researcher in the Health Economy department of Mexico's National Institute of Public Health, estimated that a 10 percent tax would reduce sugary drink consumption by 10 to 13 percent, with enough people switching to water and milk to bring down overall rates of obesity.
That hints at the main reasons coming from those who are for the soda tax: obesity. The World Health Organization, obvious proponents of the new tax, breaks down the frightening reality with some more stats:
More than 32 percent of its population is obese and nearly 70 percent are obese or overweight... diabetes and heart disease are the top two causes of deaths among adults.
And also, here's this scary roll-call of health issues:
Seven of 10 adults in Mexico are either overweight or obese, while an estimated 15% of people over the age of 20 have adult-onset Type 2 diabetes.
Really, there it is in a nutshell. The debate comes down to (1) those who see highly-worrying data about the current state of health in Mexico and feel the need to do something about it; and (2) lobbyists paid by the soda companies telling everyone to calm down, nothing to see here, just move along, it's going to be fine. And while we're pondering which side the government is ultimately going to take, this number lurks in the background:
Approval of the tax package, including the junk food tax, would generate nearly $20 billion in revenue for Mexico's national treasury.
A trimmed-up nation and money in the government's bank account. Sounds like a classic slam dunk case for the junk food tax. But a more local reason to keep an eye on this debate is that it's not crazy to think it could happen here next. This could very well be seen as a dress rehearsal for future legislation by American lawmakers.
If the people revolt and it fails miserably, you better believe the U.S. isn't going to pull any moves like this. But, if it works ...
