Background on Key Figures and Institutions
The Secretaría de Hacienda y Crédito Público (SHCP), Mexico’s Ministry of Finance, is responsible for managing the country’s public finances. This article discusses the performance of Mexico’s public revenues, focusing on oil revenues and tax collections.
Public Revenue Shortfall
As of August, Mexico’s public revenues fell short of the projected amount by 117.988 billion pesos, primarily due to lower-than-expected oil revenues. Despite higher oil prices, the production and export platforms were insufficient.
Oil Revenue Performance
Between January and August, oil revenues amounted to 598.641 billion pesos, marking a 15.8% decrease compared to the same period last year. This shortfall occurred despite an average oil price of 63.1 USD per barrel, which was higher than the projected 59.3 USD/barrel.
Tax Revenue Growth
On a positive note, tax revenues continued to grow through August, with excesses attributed to better-than-expected performance across most categories except the Impuesto Especial sobre Producción y Servicios (IEPS).
From January to August, tax revenues totaled 3,695,265 billion pesos, reflecting a 6.5% annual growth compared to the previous year. These revenues exceeded the programmed amount by 88,656 billion pesos.
“Income tax (Impuesto sobre la Renta or ISR) increased by 6.9% in real terms, surpassing the target by 60,000 million pesos in an environment of increased formal employment and sustained wage growth. The resilience of domestic consumption and a more competitive exchange rate favored the collection of the Value-Added Tax (IVA), which increased by 6.2% in real terms, resulting in additional income of 46,000 million pesos over the programmed amount,” stated SHCP under Édgar Amador Zamora.
However, the IEPS saw a 0.5% annual decline, leaving 39,421 billion pesos below the programmed amount.
Import Duty Revenue Growth
Regarding import duties, the period witnessed a favorable performance due to recent trade changes. Import duty revenues amounted to 111,082 billion pesos, marking a 24.5% annual growth with excess income of 13,211 billion pesos.
“Income associated with the import category grew by 24.5% in real terms, surpassing the scheduled amount by 13,000 million pesos. This increase resulted from recent changes in the tariff scheme for countries without a free trade agreement with Mexico, increased customs surveillance, and new tax treatment for products below the de minimis threshold,” reported SHCP.
Non-Tax Revenue
For non-tax revenues (rights, concessions, etc.), the treasury collected 296.726 billion pesos, a 15.5% annual increase. Meanwhile, the Instituto Mexicano del Seguro Social (IMSS) and the Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado (ISSSTE) contributed 466.347 billion pesos, a mere 0.1% annual growth.
The Comisión Federal de Electricidad (CFE) reported a 5.4% annual decline, leaving 322.988 billion pesos between January and August.
Key Questions and Answers
- What is the main issue discussed in this article? The article focuses on Mexico’s public revenues, specifically the shortfall in oil revenues and the growth in tax collections.
- Why did oil revenues fall short despite higher oil prices? The decline in production and export platforms led to the lower-than-expected oil revenues, despite higher oil prices.
- Which tax categories showed growth? Income tax (ISR) and non-import duty categories demonstrated growth, while the IEPS category saw a decline.
- What factors contributed to the growth in import duties? Recent changes in tariff schemes, increased customs surveillance, and new tax treatments for low-value products led to the growth in import duties.
- How did non-tax revenues perform? Non-tax revenues, such as rights and concessions, grew by 15.5%, while IMSS and ISSSTE contributions barely increased by 0.1%.
- What was the performance of the Comisión Federal de Electricidad (CFE)? The CFE experienced a 5.4% annual decline, resulting in lower revenues of 322.988 billion pesos between January and August.
