Mexican Govt Abandons Drug Tax

Following unprecedented opposition in the Senate and Chamber of Deputies, Mexico's Treasury Ministry has now abandoned plans to impose 15% value added tax on medicines and food from September 1.

The strong stand taken by legislators represents a significant reversal over past actions, in which they have uniformly rubber-stamped all legislative proposals presented by the president, ministers and government agencies, according to the Marketletter's local correspondent.

Regional and national pharmacist groups had warned that imposition of the tax would cause 10,000 pharmacies to close, putting 45,000 people out of work. However, other pharmacy owners questioned in Cuernavaca and Mexico City felt that the tax would have made little difference to the slump in their business, noting that their sales have declined 30%-50% on average since the beginning of the year, and one business reporting a total drop of 70%.