Mexicans all shook up over soft drink tax plan
Source: Reuters
By Gunther Hamm MEXICO CITY, Dec 20 (Reuters) - A proposed tax on fizzy drinks has caused a stir in Mexico, which quaffs more Coca-Cola products per capita than any other nation and has adopted soda alongside tacos and chiles into the national diet. Congress is debating a 5 percent tax on all carbonated beverages as part of new President Felipe Calderon's 2007 budget plan. Opponents say it will hurt the poor, many of whom prefer sodas because potable water is less available and sometimes more expensive. Each Mexican gulps down an average of about 40 gallons (150 liters) of carbonated drinks a year, according to the country's producers. Year-round heat throughout much of the country helps to whet their thirst. "Many people are so addicted that without Coke, they can't live," said street burger vendor Gonzalo Alvarez. The Chamber of Deputies backed the soda bill this week but it has run into trouble in the Senate, where Calderon's conservative National Action Party needs support from around a dozen opposition lawmakers to pass it. A vote in the Senate is expected later on Wednesday. Mexico's soft drinks association says the poorest Mexicans spend as much on soda as they do on tortillas or beans and that the tax would hurt them disproportionately. The country topped Coca-Cola's <KO.N> 2005 list of per capita consumption of company beverages with 533 servings. The United States was second with 431 and Chile third with 377. Worldwide, it was 77. But nutritionist Enrique Rios said a tax on fizzy drinks would force more Mexicans to turn to fresh fruit juice, abundant and inexpensive in a country like Mexico. Producers counter that soft drinks are a necessity for Mexico's poor. "There are people who drink soda starting in the morning as part of their diet. The calories they get from the drink and its sugar, although not many, keep them going," said Alfredo Paredes, spokesman for the low-cost Big Cola brand. Mexico needs new sources of income because the government is vulnerable to a drop in revenue from crude exports due to falling world prices and a key oil well beginning to dry up. The tax vote is an early indicator of whether Calderon, who took office on Dec. 1, will be able to persuade Congress to pass energy and other economic reforms. His predecessor Vicente Fox failed in an effort to put a tax on food and medicine due to opposition in Congress and from ordinary Mexicans. (Additional reporting by Miguel Angel Gutierrez)
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