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The Tax System in Mexico: A Need for Strengthening the Revenue-Raising Capacity

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  • Thomas Dalsgaard

Abstract

The Mexican tax system encompasses a number of commendable features and disincentives to work, save and invest appear less severe than in most other OECD countries. However, the system also contains major deficiencies, which hampers the efficiency and equity of the system and contribute to the fact that Mexico has by far the lowest level of tax revenues in relation to GDP among the OECD countries. The main priorities for reform should be base broadening measures such as eliminating the tax preferences for agriculture, fisheries, publishing and land transportation; substantially reducing the vast number of zero-rated and exempted goods and services in the VAT system; and broadening the income base of individuals by taxing fringe benefits and eliminate the fiscal subsidy. Furthermore, increased taxation of property, in particular real estate, would be warranted from both a revenue-raising and distributional point of view. Finally, administration could be further improved through a ... Le système fiscal mexicain présente un certain nombre d’aspects positifs, et les contre-incitations à travailler, à épargner et à investir semblent moins fortes au Mexique que dans la plupart des autres pays de l’OCDE. Cependant, le système présente aussi de sérieux défauts qui nuisent à son efficacité et à son équité et contribuent à faire du Mexique le pays de l’OCDE ayant de loin les recettes fiscales les plus faibles en proportion du PIB. Les réformes devraient viser en priorité à élargir l’assiette des impôts en supprimant les régimes préférentiels dont bénéficient l’agriculture, la pêche, l’édition et les transports terrestres, en réduisant sensiblement le nombre de produits et services assujettis à un taux zéro de TVA ou exemptés de cette taxe, et en élargissant les revenus imposables des personnes physiques par l’inclusion dans ceux-ci des avantages accessoires et par la suppression de la subvention fiscale. En outre, une imposition plus lourde de la propriété, immobilière ...

Suggested Citation

  • Thomas Dalsgaard, 2000. "The Tax System in Mexico: A Need for Strengthening the Revenue-Raising Capacity," OECD Economics Department Working Papers 233, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:233-en
    DOI: 10.1787/713001800850
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    Citations

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    Cited by:

    1. Peter Hoeller & Isabelle Joumard & Isabell Koske, 2014. "Reducing Income Inequality While Boosting Economic Growth: Can It Be Done? Evidence From Oecd Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 59(01), pages 1-22.
    2. José Sidaoui, 2003. "Implications of fiscal issues for central banks. Mexico's experience," BIS Papers chapters, in: Bank for International Settlements (ed.), Fiscal issues and central banking in emerging economies, volume 20, pages 180-197, Bank for International Settlements.
    3. Fricke, Hans & Süssmuth, Bernd, 2014. "Growth and Volatility of Tax Revenues in Latin America," World Development, Elsevier, vol. 54(C), pages 114-138.
    4. Fabrice Lehoucq & Gabriel Negretto & Francisco Aparicio & Benito Nacif & Allyson Benton, 2005. "Instituciones políticas, procesos de diseño de políticas y resultados de las políticas en México," Research Department Publications 3205, Inter-American Development Bank, Research Department.
    5. Rozane Bezerra de Siqueira & José Ricardo Nogueira & Cathal O'Donoghue, 2003. "Simulating Brazil Tax-Benefit System Using Brahms, the Brazilian Household Microsimulation Model," Anais do XXXI Encontro Nacional de Economia [Proceedings of the 31st Brazilian Economics Meeting] b50, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    6. Lehoucq, Fabrice & Negretto, Gabriel & Aparicio, Francisco Javier & Nacif, Benito & Benton, Allyson Lucinda, 2005. "Political Institutions, Policymaking Processes, and Policy Outcomes in Mexico," IDB Publications (Working Papers) 3354, Inter-American Development Bank.
    7. Rodrigo Mariscal & Alejandro M. Werner, 2018. "The Price and Welfare Effects of The Value-Added Tax: Evidence from Mexico," IMF Working Papers 2018/240, International Monetary Fund.
    8. Jorge Martinez-Vazquez, 2001. "Mexico: An Evaluation of the Main Features of the Tax System," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0112, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    9. Arturo Antón Sarabia, 2005. "Average Effective Tax Rates in Mexico," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(2), pages 185-215, July-Dece.
    10. R, Revathi & L. M., Madhushree & Aithal, Sreeramana, 2019. "Review on Global Implications of Goods and Service Tax and its Indian Scenario," MPRA Paper 95152, University Library of Munich, Germany.
    11. Isabelle Joumard & Mauro Pisu & Debbie Bloch, 2012. "Tackling income inequality: The role of taxes and transfers," OECD Journal: Economic Studies, OECD Publishing, vol. 2012(1), pages 37-70.
    12. Fabrice Lehoucq & Gabriel Negretto & Francisco Aparicio & Benito Nacif & Allyson Benton, 2005. "Political Institutions, Policymaking Processes, and Policy Outcomes in Mexico," Research Department Publications 3204, Inter-American Development Bank, Research Department.

    More about this item

    Keywords

    impôt; Mexico; Mexique; taxes;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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