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Analysis of the official resolution to implement the IEPS tax, to sugar beverages

Carlos Pech Roman A01450954

Nowadays, sugar beverages have been a huge topic of conversations especially due to the high
consumption from Mexican population, as well as the health problems this soft drinks cause.
Mexico is right now one of the top countries with obesity problems and also with hearth
problems considered the number one cause of death. For this reason, Secretaria de Salud to
form a National Strategy to combat obesity and diabetes. This plan was part of the government
Development Plan of 2013-2018. According to the article, an initiative was proposed for taxing
with IEPS thru the establishment at the producer and importer level, with a specific quota of 1
peso. This quota was specifically focus on products such as one-liter sugar beverages, including
concentrated syrups, flavor extracts or essences.

The article was correct in assessing a situation, the consequences of consumption and
the measures taken by the government to combat obesity and diabetes. However, the
documents lack an in-depth analysis of the effects of sugar beverages to the population and the
possible results the government proposal can do to reduce the number of health problems in
the nation. In addition, the report lacks descent research data to justify the arguments it is
proposing as it not mention the population affected, production of sugar beverages or expected
results from the application of the IEPS.

The structure of the article does not provide an order regarding the duty of each
governmental department into the application of the tax. There is mention from different
organizations in this essay, however none of them mention their description of their objectives,
such as the development plan from Secretaria de Salud. Furthermore, based on current statistic
from Mileno, even after the application of this measures the number of people affected by
diabetes and obesity 108% in Mexico. However, it is important to mention the consumption of
sugary beverages decrease by 5%. This is a minimal decrease in comparison of the total amount
of health problems these beverages are causing. Moreover, the production of chemical
sweeteners has continued to increase including fructose production by 5%. This production has
been shifting into other sugary products as sweet beverages become more expensive. In
addition, that the general consumption of sweet beverage had a minimal decrease.

Based on this analysis, it is certainly assumable that the application if IEPS to sweet
beverages has been a complete failure. In Mexico, this type of products can be considered to be
inelastic, so this might imply that even that there is a price increase taking place. There is no
drastic effect in the change of price. This is due to the adoption from the Mexican population as
is considered one essential article for consumption and in some cases these sweet products can
be even cheaper than water.

In conclusion, it is correct to stipulate that the article misses and important point to
mention the implication of a new taxation to sweet products. The essay does not analyze
properly the effects of implementation of IEPS and address the consequences this is provoking.
Moreover, the article lacks a proper conclusion with acknowledgement of the purpose of the
topic discussion and the closing point regarding the effects of the application.