A tax reform is urgently needed in Mexico (expert)

Jesús Garza, Professor at EGADE business school at the Tecnológico de Monterrey (Photo: EGADE)

Mexico requires a tax reform that is capable of increasing revenue collection, because otherwise not only will resources be lacking to pay for the federal government’s public policies, but stabilization funds would also be terminated, specialists warned.

Jesús Garza professor at EGADE Business School at the Tecnológico de Monterrey, highlights the need to implement an efficient tax reform that includes the economically active population (PEA) that is in informality and does not pay taxes directly, which is estimated to be around 50%.

“Remember that the past administration tax reform, only increased by 2% percent the collection of GDP,” he lamented.

To increase tax collection, one option is to increase and standardize indirect taxes, that is, those that go over consumption. “There you automatically capture 100% of the population,” he said.

The need for resources from the government has sparked a wave of austerity at almost all levels of the federal administration, reflecting the commitment to maintain healthy public finances and contain nervousness and uncertainty in the markets.

In an idea to get fresh resources, President López Obrador said on Friday Feb. 7, that he will “raffle the cost” of the presidential plane José María Morelos y Pavón so that his government acquires medical equipment, covers the appraisal of the aircraft and has maintenance for the next two years, time in which he will seek to sell it.

AMLO explained that the idea is to sell 6 million tickets at a price of 500 pesos to obtain 3,000 million pesos to meet these objectives. He said that there will be a total of 100 prizes of 20 million pesos, an amount that will be covered not with what was obtained in the raffle, but with a fund from the recently created, so-called, Institute to Return the Stolen People (Indep).

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