MEXICO: President urges tax cut on soft drinks - report

By | 26 May 2006

Mexico has taken a first step to eliminate its controversial tax on soft drinks made from high fructose corn syrup.

Mexico's President Vicente Fox has urged the country's parliament to wipe out the tax, which was introduced to protect Mexico's sugar growers. The tax was imposed in 2002, levied against any soft drinks sold in Mexico that were made from anything other than cane sugar grown in Mexico.

However, in March, the World Trade Organisation rejected an appeal by Mexico and supported US claims that Mexico was violating international trade law in imposing the 20% tax.

According to an Associated Press report yesterday (25 May), Mexico's lower house will consider the presidential request.

The report said that the tax had made it prohibitive to use non-Mexican corn sweetener in soft drinks and, as a consequence, the US share of Mexico's soft drinks market had shrunk to 6% of the level it was before the tax was introduced.

Sectors: Soft drinks

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