On October 29, 2025, the Mexican Senate took a decisive step toward reshaping the nation’s fiscal landscape, approving the revenue portion of the 2026 budget and igniting a fierce debate over a series of sweeping tax hikes. The package, which includes significant increases in so-called “sin taxes” on gambling, tobacco, sugary drinks, and violent video games, is central to President Claudia Sheinbaum’s plan to narrow Mexico’s looming budget deficit and shore up funding for social welfare programs. With the stakes high and opinions divided, the outcome of this legislative battle could define the early tenure of Sheinbaum’s administration—and set the tone for Mexico’s economic policy in the years ahead.
According to iGaming Expert, the review of the proposed tax hikes is being led by Senator Manuel Huerta Ladrón de Guevara, who chairs the Joint Committees of Finance and Taxation. These panels are charged with weighing the financial, social, and economic fallout of the new rules before the full Senate casts its vote. At the heart of the proposal is an overhaul of the Special Taxes on Production and Services (IEPS), a fiscal lever the government hopes will both boost revenues and curb behaviors deemed harmful to public health.
The government’s plan is ambitious. The IEPS tax rate on gambling and lotteries is slated to jump from 30% to 50%, and for the first time, the levy would be extended to digital and online platforms—regardless of whether they operate domestically or internationally. This move is described in the MORENA party’s submission as “a public policy measure designed to reduce child and adolescent exposure to harmful content, while generating income to offset the social and health costs associated with its consumption.”
But gambling isn’t the only target. The fiscal package also introduces a specific levy on sugary drinks—including those made with artificial sweeteners—and raises excise duties on tobacco and nicotine-based products. The nicotine tax, in particular, is set at a steep 200% per milligram of content, which government officials argue will support both public health and fiscal sustainability. All told, Sheinbaum’s team expects these higher taxes to bring in about MX$41 billion (roughly €2.5 billion) in extra revenue, a crucial sum that will help chip away at a projected MX$1.4 trillion (€70 billion) budget gap for 2026.
According to senators from Mexico’s ruling party, the approved budget is a necessary step to increase government income and narrow the fiscal deficit, as reported by Bloomberg. The revenue boost is intended to keep vital social welfare programs afloat, even as the government promises stricter customs checks and improved tax collection to further bolster public coffers.
Yet, not everyone is convinced the plan will work as intended. Business groups and consumer advocates have come out swinging against the tax hikes, arguing that higher levies on gambling, tobacco, and sugary drinks could end up hurting legitimate businesses and driving consumers into the black market. Industry representatives claim that the government failed to engage in meaningful dialogue with the sectors most affected by the changes, and many companies are left scrambling to understand how and when the new rules will be implemented—or what compliance will actually require.
Gambling and tobacco companies, in particular, are sounding the alarm. They contend that the sharp rise in taxes might not curb risky behaviors as intended, but could instead fuel an uptick in illegal sales and unregulated gambling. Their concerns are compounded by the fact that Mexico’s gambling laws are woefully out of date, with the Federal Gaming and Lottery Law dating all the way back to 1947. Critics warn that raising taxes without modernizing the regulatory framework will only create more confusion and further weaken oversight.
Opposition lawmakers aren’t content to simply criticize. Ricardo Mejía Berdeja of the Workers’ Party has introduced a bill that would establish new rules for online gambling and raise the legal gambling age to 21—measures he argues are necessary to protect vulnerable populations and bring Mexico’s laws in line with international standards. However, the ruling MORENA party has so far shown little interest in these proposals, even as some officials concede that the current system is in desperate need of reform.
As the Senate prepares for a full debate, several key questions remain unresolved. Lawmakers must decide how long the new IEPS rules should remain in effect, and whether violations should be treated as criminal offenses. The answers will have far-reaching implications, not only for the industries directly affected but also for the government’s ability to pass its first national budget without major amendments—a critical test of President Sheinbaum’s fiscal discipline and her party’s political cohesion.
Public opinion, meanwhile, remains sharply divided. Supporters of the tax hikes argue that they are a responsible and necessary response to Mexico’s fiscal challenges, and that targeting products linked to public health and social issues is both pragmatic and just. Detractors, on the other hand, claim that the new taxes unfairly “punish the average Mexican consumer,” and warn that the measures could stifle economic growth and exacerbate inequality.
For President Sheinbaum, the stakes could hardly be higher. The passage of the IEPS package will not only shape Mexico’s fiscal trajectory for 2026 but will also serve as an early measure of her economic credibility and reformist resolve. As the debate rages on, all eyes are on the Senate to see whether the government can deliver on its promises—or whether political and industry resistance will force a rethink of the nation’s fiscal strategy.
In the coming weeks, as senators weigh the competing arguments and the practical realities of implementation, the outcome will provide a revealing glimpse into the priorities and capabilities of Mexico’s new administration. Whatever the result, one thing is clear: the decisions made in the Senate this fall will reverberate far beyond the halls of Congress, shaping the lives of millions of Mexicans and setting the course for the country’s economic future.
