In an economic context of increasingly scarce resources, the legitimacy of the Mexican tax system is key to maintaining national unity. For President Andrés Manuel López Obrador (AMLO) to cling to the construction of an unnecessary refinery, a train and an airport is foolish. This in the face of the pressing need for resources to save lives or companies. While in other countries fiscal resources are being injected into different levels of government and to help taxpayers, AMLO says that he will not open his wallet. It is not surprising that two rebellions are brewing.
The first rebellion comes from governors of some Mexican states whose inhabitants pay more federal taxes with respect to the resources they receive from the federal government.
The states have lived comfortably under a fiscal arrangement in which the federal government collects taxes and the state governments receive their shares and contributions. More than 80% of their income comes from the federal government.
It used to be that the Mexican federal government’s oil revenues were used to compensate those states who contributed the most. In 2008, oil revenues were equivalent to 7.3% of Mexico’s GDP and represented 32% of total revenues of the Mexican federal government. A part of them went to the states. In 2019, oil revenues amounted to just 1.7 percent of GDP. This year they will be even smaller. They no longer compensate the states that put more. Four of the Mexican states that contribute more than they receive (Coahuila, Jalisco, Nuevo León and Tamaulipas) want to review the fiscal arrangement.
The second rebellion comes from some local business organizations. As a result of the health emergency, the Mexican federal government has forced the temporary closure of non-essential companies and pressures them to pay their workers’ wages in full. However, the government is not postponing one day the federal tax filing deadline.
The country will need a new social and fiscal arrangement. If the government simply continues to impose its worldview, this new arrangement can come in a very disruptive way. The rebellion against the payment of federal taxes can become one of the central themes of Mexico’s 2021 election cycle.
* Carlos Elizondo Mayer-Serra is professor at the School of Government and Public Transformation at Tec de Monterrey, in Mexico City. A Spanish version of this Op-Ed appeared first in Reforma’s newspaper print edition. Twitter: @carloselizondom
