Starting January 1st, Mexicans will face a 16 percent sales tax on pet food. Previously commercial animal diets were not taxed, along with fresh human foods. Now the Mexican government is desperate to raise money and has declared pet food a luxury item (food for horses and other livestock animals will be excluded from the tax). Protesters have been rallying outside of the Finance Ministry, but the tax is unlikely to be overturned.
Pet food sales average $2.2 billion a year in Mexico, meaning the government stands to profit tremendously from the new tax. Mexico is the world's 10th biggest pet food market, with the U.S. in the top spot, spending more than $20 million annually to feed our dogs and cats.
It's estimated that half of Mexico's pet families use commercial foods, while the rest make their own, typically a mixture of chicken, rice, and tortillas. The new tax will hit low income households the hardest and may cause more people to rely on table scraps for pet food, or even abandon their animals altogether. Some fear that the tax will also create a reluctance to adopt animals, putting an even greater strain on shelters who will already be feeling the financial effects of the food tax.
I understand that the government has to raise money somehow (proposals for taxes on real estate sales and private school tuition were not passed), but I wouldn't consider pet food a luxury item. I could see taxes on the purchase of a pet (versus adopting) or even professional grooming (a tax proposed years ago in Chicago), since they're not essential.
What's your take on the luxury pet food tax?