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The Mexican Tax on Alcoholic Beverages: Reasons to Change It

Author

Listed:
  • Anel Rodríguez Quinto

    (Texas A&M University)

  • Luis Antonio Foncerrada Pascal

    (Universidad Anáhuac Mayab)

Abstract

Excessive consumption of alcoholic beverages causes addiction, damages people’s health and has disrupting social and family consequences. Given that, many countries impose other taxes on these products in addition to sales tax. The ways these taxes are applied varies, though they are based on two basic principles: Ad-Valorem2 or Ad-Quantum.3 i n the case of mexico, the Special Tax on pro-duction and Services (IEPS, Spanish initials) for alcoholic beverages is based on an ad-Valorem system with different quotas according to alcoholic content, thus combining the two principles. However, with this system, lower quality beverages with high degrees of alcohol are among the cheapest on the market, curtailing the objective of the tax. We have tested the change to the ad-Quantum system, to measure government revenues and regressive effects. our findings indicate that tax collection would increase with no regressive effects

Suggested Citation

  • Anel Rodríguez Quinto & Luis Antonio Foncerrada Pascal, 2022. "The Mexican Tax on Alcoholic Beverages: Reasons to Change It," Economía: teoría y práctica, Universidad Autónoma Metropolitana, México, vol. 57(2), pages 193-214, Julio-Dic.
    • Handle: RePEc:ety:journl:v:57:y:2022:i:2:p:193-214
    DOI: 10.24275/ETYPUAM/NE/572022/Rodriguez
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    More about this item

    Keywords

    Tax; alcoholic beverages; Ad-Quantum system; health risks; tax collection;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I39 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Other

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