Beginning January 1, 2025, Mexican consumers will face increased costs on fuel, tobacco, and sugar-sweetened beverages. This adjustment follows the annual updates to the Impuesto Especial Sobre Producción y Servicios (IEPS) tax, which will rise by 4.5%. The Mexican government aims to mitigate inflation effects and bolster tax revenues, which are expected to have significant impacts on the wallets of consumers nationwide.
The Secretaria de Hacienda y Crédito Público (SHCP) published the new tax rates on December 27, 2024, stipulating increased taxes on gasoline, cigarettes, and sugary drinks, along with other fossil fuels. Specifically, Magna-grade gasoline (less than 91 octane) will cost 6.4555 pesos per liter, up from 6.1752; Premium-grade gasoline (equal to or above 91 octane) will increase from 5.2146 to 5.4513 pesos per liter; and diesel prices will rise from 6.7865 to 7.0946 pesos per liter.
Tobacco products will also see tax increases. The cost per cigarette will rise to 0.6445 pesos, reflecting 0.0281 pesos more than established for 2024. Similarly, sugary beverages including sodas and fruit juices will now be taxed at 1.6451 pesos per liter, up from 1.5737 pesos.
The increase is calculated based on inflation rates published by the Instituto Nacional de Estadística y Geografía (INEGI), ensuring the government's revenue maintains its purchasing power amid rising consumer prices. The SHCP emphasized these adjustments support “government programs and activities,” aiming to address public health concerns linked to the consumption of these products.
Given the conscious effort to discourage unhealthy consumption habits, these tax changes coincide with broader public health initiatives aimed at reducing sugary drink and tobacco use. Mexican President Claudia Sheinbaum noted these new measures are part of the government's revenue enhancement strategies. 'The adjustment will impact consumers, particularly lower-income households,' she outlined, emphasizing the challenge many will face as costs increase.
These price hikes come at a time when the federal government reports their total tax revenues surged 5% in 2024, amounting to more than 4.9 trillion pesos. Still, the government asserts there is no immediate need for broader scale tax reforms.
The response from consumers is likely to be mixed. Many have voiced concerns surrounding the rising costs of daily necessities amid the broader economic environment, where inflation has already made its mark on household budgets. Consumer groups have cautioned about the cumulative impact of these increases, noting how the connection between gasoline prices and the pricing of goods may translate to higher costs for items beyond fuel itself.
With these developments set to take effect at the start of the new year, many Mexicans eagerly await the changes, grappling with the prospect of adjusting budgets and spending habits as they brace for the forthcoming economic effects.
