Fiscal policy in Mexico during the Covid-19 pandemic

The Mexico’s fiscal policy It has been guided over the past three years by “Republican austerity” as an example of the response to Pandemic, less than 1% (0.7%)) of the Gross Domestic Product (GDP) to help people during the most severe health emergencies.

The amount allocated contrasts with more developed countries, such as the United Kingdom, France and the United States, which allocated the equivalent of 17.7, 15.2 and 10.5% of their GDP, respectively, according to the Center for Strategic and International Studies (CSIS, for its English acronym).

The International Monetary Fund revealed earlier this year that poverty in Mexico has been exacerbated by the lack of access to health services and modest financial support granted by the government in Mexico. covid-19 pandemic.

According to the agency’s experts, based on data published by the National Council for the Evaluation of Social Development Policy (Connival), the number of People who live in poverty From 51.9 million in 2018 to 55.7 million in 2020.

Although José Nabor Cruz, Executive Secretary of Conval, for his part, admitted that without social programs, such as pensions for the elderly, the growth of poverty would have been greater, because it would have reached 45.9% of the population, an increase of 6.3 million in poverty.

Despite the fact that social programs helped sectors of society, it is also true that they put pressure on federal spending and the problem is not in giving the resource, but where it will come from.

For example, the government program of welfare pension It will require a budget equal to 1.9% of GDP so that in 2024 it can serve the country’s 12 million adults over 65, according to estimates by the Center for Economic and Budgetary Research (CIEP).

See also  Economy: On Monday, the union will demand that the government acquit the contributions of the restricted activities

The opportunity for this government was to introduce significant tax reform, yet it remained only in the “public fiscal miscellaneous” with which the public treasury estimated to generate income of up to 1% of GDP.

Pandemic can be a catalyst

Civic organizations such as Fundar and CIEP have expressed concern given Mexico’s fiscal space shrinking over time, which is why it is struggling for a more advanced and transparent financial system.

One of the proposals launched by the organizations is a wealth tax, this already exists in some Latin American countries, which will seek to tax the people with more resources in the country, at a rate of 3.5% per year, with which could get about 99,000 million pesos, That is 0.4% of GDP.

In addition, to implement a inheritance tax, which are exempt from paying income tax (ISR) in Mexico. This could leave an additional income of 5,000 to 30,000 million pesos.

Similarly, the organizations have called for improved property tax collection – which can be charged as much as 378,000 million pesos – and the resumption of holding collection, which will leave up to 80,000 million pesos.

SAT tightened the nut in 2020

Similarly, as part of the new fiscal policy apart from not paying taxes, during 2020, Mexico’s tax revenue grew by a real 0.8% compared to what was recorded in 2019, making it one of two countries where tax collection has not decreased. And he was able to mitigate the ravages of Covid-19.

This caught the attention of the Economic Commission for Latin America and the Caribbean (ECLAC), rating agency Fitch and the International Monetary Fund.

See also  Valencia restrictions | The end of his UK trip anticipates an 'explosion' of reservations

The Tax Administration Service (SAT)led by Raquel Buenrostro, implemented a series of measures in 2020 that generated additional resources of more than 496.2 billion pesos, equivalent to 2.2% of GDP.

Among the actions that attracted the most interest, debt collection that some major taxpayers had with the SAT, such as BBVA, Walmart, IBM, Femsa and Grupo Modelo, somehow mitigated the damage the pandemic had caused to public finances. In total, in 2020, major taxpayers left more than 216,000 million pesos to the treasury.

In addition, the fight against tax evasion and tax evasion has recovered more than 385,800 million pesos through control programs and more than 169,800 million pesos for non-elimination control during the year 2020.

“This (tax) revenue is estimated to account for 14.5% as a percentage of GDP, the highest in the past 10 years in relation to GDP and an additional 1.3 percentage points compared to 2019 when there was no pandemic,” the agency stated on that occasion. . .

[email protected]

Leave a Reply

Your email address will not be published.