Fortune tax would leave 270,000 million pesos to the government

Establishing a progressive federal tax on large fortunes in Mexico would allow the collection of up to 270,000 million pesos annually, an amount sufficient to increase spending on public health by almost 40% or 17 times the federal spending allocated today to environmental protection, reveals an Oxfam report Mexico.

Through the report “Who pays the bill? The myths behind the taxes on large fortunes in Mexico”, the organization proposes setting a tax rate of 2% for those with more than 20 million pesos, and 3% for those whose fortune is above 100 million pesos. , and 5% for billionaires (those who have fortunes of more than 20,000 million pesos or 1,000 million dollars).

To “begin to change the current state of the Mexican tax system,” it also recommends promoting deep, progressive, and transparent tax changes; review the tax privileges of the richest 1%; prioritize public investment in social infrastructure, such as health, education and care, and promote the active participation of the Mexican government in regional fiscal discussions.

The modifications, necessary both in the Federation and in the subnational governments, expands, should prioritize the progressive collection of public money and transparency in who pays and what this money is used for.

“These modifications should aspire to a systematic increase in the Income Tax of the 1% of highest income, equalize the rates charged for both work and capital, promote taxes on large inheritances and donations, and review the current taxes on the property, such as property and tenure, so that they collect better and from those who own more property ”, he specifies.

Regarding the proposal to review the tax privileges of the richest 1%, it proposes to evaluate, examine and eliminate tax waivers and other tax privileges in the tax codes because they are concentrated above all in the people with the highest income and fortune in the country.

Richer after pandemic

Despite the advances in social and labor policies of the federal government and in the midst of various conjunctural crises due to the effects of the Covid-19 pandemic, the document refers to, the super-rich in Mexico have seen their fortunes grow by a third (33 %) since the start of the pandemic.

“For every 100 pesos of wealth created between 2019 and 2021, 21 pesos went to the richest 1% and just 0.40 pesos to the poorest 50%. Only Carlos Slim, the richest man in Mexico and Latin America and the Caribbean, concentrates more wealth than half of the Mexican population and has seen his wealth grow by 42% since the beginning of the pandemic, an amount equivalent to US $1 million per hour.

“However, these numbers are not reflected in the part of the bill that the super-rich pay. Taxpayers with income above 500 million pesos per year barely represented 0.03% of total tax collection. In addition, large companies paid until 2021 effective ISR rates of between 1 and 8% of their total income, well below the 30% established by law. When the super-rich don’t pay, we pay,” the report cites.

And that not only does the tax contribution of the super-rich not match their ability to pay, but they also use different mechanisms to pay less taxes.

“An example of this can be found in the recent litigation of Grupo Salinas which, after a resolution of the Supreme Court of Justice of the Nation, had to make a payment of 2,776 million pesos. However, said amount barely represents 7% of the total amount owed by that consortium, which amounts to about 37,000 million pesos ”, he specifies.

Finally, it details that “it is estimated that up to 400,000 million pesos in business profits in Mexico are transferred annually to tax havens, which further reduces the collection potential of the Mexican government.”

rolando.ramos@eleconomista.mx