Including tax reform during a political campaign will always backfire on winning votes. That is why fiscal reforms are generally proposed by a government during the first two years of its mandate, since that is when it has the greatest political capital to do so.
The 4T government missed that opportunity. Despite the fact that some officials were aware that tax measures were necessary to support greater spending on social programs and infrastructure projects, the Treasury secretaries Urzúa and later Herrera chose not to confront the President and not propose a necessary reform. fiscal. They preferred to hide behind the fallacious presidential argument of a “moderate and conservative” fiscal policy. The reality is that public finances are weak and given the inability to generate resources, they could lead to a crisis.
It is imperative to think that in 2025 a tax reform must be proposed. The components continue to be the same that have been avoided for years: (a) homologation of VAT, eliminating the zero rate and rationalizing exemptions for some basic goods; (b) eliminate the exclusions of the ISR and extend the highest range of said tax; (c) a gradual increase over several years in the tax per ton of CO2 emissions; (d) restore the empty stabilization funds such as the FEIP with these higher incomes; and (e) a property tax reform that requires a general updating of the cadastre; Said reform would have many virtues such as reducing transfers from the Federation to the States and eventually eliminating them. This would foster fiscal responsibility of local governments, eliminate centralism, and could give state police more resources to combat organized crime activities such as land rights and extortion. Luis de la Calle, a prominent economist, has a well-structured proposal to reform the property tax (see http://www.economia.unam.mx/assets/pdfs/econmex/05/04LuisdeCalle.pdf).
In essence, the above components for a tax reform were included in the recent IMF recommendations to the country’s authorities in their report under the Article IV Consultation. To these suggestions, the SHCP responded that in principle they support that productive public spending financed by a tax reform could contribute to economic growth. However, they noted that these measures require time to be implemented. Of course! But then why didn’t they do it during the first two years of the six-year term? SHCP insists that they feel confident with the administrative measures applied to combat tax evasion and fraud. Quoting the president, “the fight against corruption is the best fiscal policy.” Nope! less corruption does not generate stable and recurring sources of income as a tax does.
This government will inherit a fiscal problem from the next administration. For this reason, academic and private institutions must work on a tax proposal for 2025.
Twitter: @frubli
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