Budget revenues will drop to 22.7% of GDP this year

Budget revenues will drop, as a proportion of the Gross Domestic Product (GDP), this 2023, according to estimates made by the Ministry of Finance and Public Credit (SHCP).

In the General Criteria of Economic Policy 2023, the agency stated that this year the income that is collected from taxes, oil and other concepts will be located at 22.7% of GDP.

Although the rate would be higher than what was approved for 2022 of 21.9%, the data is less than the update that was made of public finances where it is expected that, at the end of last year, budget revenues have been located at 23.2% of GDP.

With this estimate, budget revenues would be at their lowest level since 2019, the first year of the current administration.

In that year, public sector revenues stood at 22% of GDP, amid promises by the incoming government not to implement substantial changes to the tax code and, instead, to increase tax revenues through a greater supervision.

In accordance with what was approved in the Federal Income Law (LIF), in 2023 income of 7 trillion 123.474 million pesos is expected.

Of said amount, 1 trillion 317.653 million pesos will enter the government coffers for oil, which represents 4.2% of GDP.

Due to the payment of taxes by taxpayers, a record collection of 4 trillion 620.165 million pesos is expected, which represents 14.7% of GDP.

The remaining income will be obtained from organizations and companies such as CFE, IMSS and ISSSTE, rights, uses, among others.

they will keep going down

In accordance with the expectations embodied in the 2023 Economic Package, which was approved last year by the Congress of the Union, budget revenues as a percentage of GDP will continue to decline in the following years.

By 2024, they are expected to reach 22.4% of GDP, while by 2025 they would drop to 22.2%. By 2028, budget revenues would be located at 22.1% of GDP.

In the current administration, budget revenues were affected, in 2020, by the Covid-19 pandemic.

Although it was possible to maintain tax collection in the face of increased inspection by the Tax Administration Service (SAT), on the side of oil revenues a significant drop was observed.

In 2022, the trend in oil revenues was reversed due to the recovery of hydrocarbon prices at the international level.

However, the significant increase took its toll on tax revenues since the government began to increase the fiscal stimulus on the IEPS for gasoline to avoid strong increases in the price of fuel, which led to the fact that in a few months it renounced all collections for this tax.

It is expected that this year, the stimuli to gasoline will continue; however, the revenue loss is not expected to be as strong as last year.