The highest inflation in the last two decades will impact the price of soft drinks, gasoline and tobacco in 2023. The Ministry of Finance and Public Credit has updated the quotas of the Special Tax on Production and Services (IEPS) for these products according to a inflation that remains above 7%. The adjustment made by the federal agency was set according to the price escalation registered from November 2021 to November 2022. Thus, the fee payable for the tax on these products by consumers rises from 7.35%, which is applied currently at 7.79%.
The IEPS quota updated according to inflation for Magna gasoline will be 5.9195 pesos per liter in 2023, which represents an increase compared to the 5.4917 pesos per liter that will be charged until December 31 of this year. In the case of Premium gasoline, the special tax to be paid will go from 4.6375 pesos to 4.9887 pesos per liter as of next year and for diesel the tax rate will go from 4.6375 pesos per liter to 6. 5,055 pesos in 2023. According to the Ministry of Finance, the upward adjustment must be made in accordance with the Federal Tax Code.
Because gasoline is considered a staple product, the Government of Mexico, at certain times, grants tax incentives on the tax on this product. This year, for example, the Lopez Obrador Administration has decided to totally or partially waive the collection of the IEPS on gasoline to tackle the sudden rise in fuel prices in the international market. So far in 2022, the fuel subsidy has left a fiscal gap of more than 100,000 million pesos, according to the most recent report from the Ministry of Finance. Thus, the rise in gasoline could still be adjusted downwards in accordance with the policy dictated by the federal government for 2023.
Through a decree published in the Official Gazette of the Federation (DOF) this Wednesday, cigarettes and soft drinks will also increase their IEPS charge by 7.79% starting next year. In the case of cigarettes, the increase will be from 0.5484 pesos per cigarette applied in 2022 to 0.5911 pesos per unit and for sweetened and flavored beverages, the SHCP updated the tax from 1.3996 to 1.5086 pesos per liter.
The IEPS is a tax, created in 1980, that taxes fuels, pesticides, alcoholic beverages, soft drinks, tobacco and foods with a high caloric content and other products that are not part of a basic table. This tax, like the Value Added Tax (VAT) is an indirect tax, so taxpayers do not pay it directly, but transfer it to their customers.
IEPS income has plummeted this year due to the subsidy that the Lopez Obrador government has applied to gasoline in the face of the sudden rise in international crude oil prices due to the Russian conflict in Ukraine. The Treasury reported from January to October the collection of 74,370 million pesos for the IEPS, a 79% drop compared to the more than 343,000 million pesos received for this tax in the same period of 2021.
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