Accelerating effective tobacco taxes in Mexico: Special taxes, consumption, inequality, and poverty
Publication Source


Policy brief
The Americas
Economy status
Upper-middle-income economies

This study evaluates the consumption effects of special tobacco taxes in Mexico. It also analyses the distributive effects under four tax reform scenarios. In the international context, cigarette prices in Mexico are lower than prices in other countries, and have lagged over the past several years. Also, Mexico has an additional difficulty in resource allocation to fight tobacco related illnesses: On the one hand, Mexico has one of the lowest healthcare budgets in Latin America. On the other hand, due to decreased non-tax revenues since 2015, particularly oil revenues, healthcare budgets, which often comprise up to 25% of the total budget, have been severely restricted. Furthermore, tobacco taxes have not been modified since 2011.