Revenue and tobacco-related expenditure. Expanding health sector funding

In Mexico, the cost of treating conditions associated with tobacco use exceeds health sector expenditure. An increase in tax would reduce tobacco consumption and generate more revenue. Earmarking revenue from the Excise Tax on Production and Services (IEPS) to fund the health system would help to narrow the gap between the cost of providing care to all those who need it as a result of tobacco use and actual spending.

A bill currently in the Congress proposes an increase in the fixed component of IEPS on tobacco from 0.4944 to 1.4944 pesos per cigarette. This policy brief explores the effect of the proposed increase and the feasibility of earmarking revenue generated for the treatment of smoking-related diseases.