Introduction to the Issue
According to an analysis by Oxfam Mexico, a progressive tax reform coupled with increased spending in specific areas of the budget could boost Mexico’s tax revenue by nearly $100 billion. This proposal aims to address the country’s low tax-to-GDP ratio, which stands at 14%, placing Mexico last among OECD member countries.
Current Tax Revenue and Necessary Changes
Data from the Organisation for Economic Co-operation and Development (OECD) indicates that Mexico’s tax revenue as a percentage of its Gross Domestic Product (GDP) is significantly lower than other member countries. This situation necessitates fiscal reforms to meet the growing demand for public spending, as emphasized by Oxfam.
Oxfam’s Proposed Reforms and Spending Measures
During a forum titled “10 Points Towards Fiscal Justice in Mexico” at the Chamber of Deputies, Oxfam highlighted the potential revenue gains from a progressive tax reform and increased spending in targeted areas of the budget. The proposed changes aim to raise overall tax revenue by 20%, equating to $993.7 billion.
Tax Reform Proposals
- Fair and Progressive Predial Tax: Implementing a nationwide predial tax, currently collected in some states and municipalities, could generate an additional $9.7 billion.
- Imposing Tax on Large Inheritances, Donations, and Successions: This measure could yield $39.8 billion in revenue.
- Solidarity Contribution from Large Fortunes for National Unity: This contribution could raise $28.66 billion.
- Regional and International Economic Cooperation: This could bring in an additional $103 million.
Spending Measures
Oxfam also suggests reallocating public spending to prioritize areas such as:
- Strengthening Labor Inspections: Increasing resources for labor inspections to ensure fair working conditions and wages.
- Infrastructure and Care Services: Investing in essential infrastructure and care services, including the proposed Sistema Nacional de Cuidados (National Care System) led by President Claudia Sheinbaum.
- Public Transportation: Enhancing public transportation systems, particularly mass transit and electric options.
- Institutional Capacities and Transparency: Improving the efficiency and transparency of public institutions.
Key Questions and Answers
- What is Oxfam Mexico’s proposal? Oxfam Mexico suggests a progressive tax reform accompanied by increased spending in specific areas of the budget to boost Mexico’s tax revenue by approximately $100 billion.
- Why is tax reform necessary in Mexico? Mexico’s tax-to-GDP ratio is 14%, the lowest among OECD member countries, necessitating fiscal reforms to meet growing public spending demands.
- What are the proposed tax measures? Oxfam proposes a fair and progressive predial tax, taxing large inheritances, donations, and successions, a solidarity contribution from large fortunes, and regional and international economic cooperation.
- How would public spending be allocated under this proposal? The proposal prioritizes strengthening labor inspections, investing in infrastructure and care services, enhancing public transportation, and improving institutional capacities and transparency.
