Tax Revenue Growth Amidst Declining Petroleum Incomes
According to the information from Mexico’s Secretaría de Hacienda y Crédito Público (SHCP), tax revenues totaled 2 trillion, 411,895 million pesos between January and May of this year. This represents an annual growth of 8.9%, while petroleum incomes plummeted by 23.8% during the same period.
Tax Revenue Performance
The SHCP reported that tax revenues grew by 8.9% on a real annual basis during the January-May period, marking the highest increase since 2016. This growth was primarily driven by revenue from VAT (12.5% real) and income tax (8.2% real), along with a significant increase in customs revenue, reflecting the strength of the domestic market and improved tax collection efficiency.
Petroleum Income Decline
In contrast, petroleum incomes totaled 375,217 million pesos during the same period, a 23.8% decrease compared to the first five months of the previous year. The SHCP’s Informe de Finanzas Públicas y la Deuda Pública indicated that the lower petroleum revenue was due to failing to meet the established petroleum targets, partially offset by a higher exchange rate.
Public Spending Overview
The government of Claudia Sheinbaum continued to underspend, with 224,387 million pesos left unspent despite being budgeted. Total public spending amounted to 3 trillion, 722,604 million pesos, a 5.3% annual decline.
The SHCP stated, “In line with fiscal targets, public spending decreased by 5.3% on a real annual basis while demonstrating efficient spending, with a 94.3% advancement relative to the plan, ensuring the provision of social programs, infrastructure, and public services.”
However, programmable spending – responsible for providing services to the population – fell by 9.6%, while non-programmable spending (excluding financial costs) grew by 2.4%.
Debt Service and Fiscal Balances
Meanwhile, debt service increased by 13.1%, absorbing 460,550 million pesos from the public budget.
“Fiscal balances showed a solid performance, better than anticipated in the program. The budgetary deficit stood at 251,000 million pesos, lower than the projected 411,000 million; the primary budgetary balance surplus was 210,000 million pesos, exceeding estimates by 139,000 million; and Requerimientos Financieros del Sector Público reached 357,000 million pesos, within the limits authorized by the H. Congress of the Union.”
Key Questions and Answers
- What is the main topic of this article? The article discusses Mexico’s tax revenue growth and the decline in petroleum incomes between January and May of the current year.
- Who is responsible for providing the information in this article? The Secretaría de Hacienda y Crédito Público (SHCP) is the source of the data and analysis presented in this article.
- What factors contributed to the growth in tax revenues? The growth was primarily driven by revenue from VAT, income tax, and increased customs revenue due to a robust domestic market and improved tax collection efficiency.
- Why did petroleum incomes decline? The decrease in petroleum incomes was due to failing to meet established targets, partially offset by a higher exchange rate.
- How did public spending perform in this period? Public spending decreased by 5.3% annually, with programmable spending falling by 9.6% while non-programmable spending grew by 2.4%. However, the government demonstrated efficient spending, advancing 94.3% relative to the plan.
- What is the status of debt service and fiscal balances? Debt service increased by 13.1%, absorbing a significant portion of the public budget. Fiscal balances showed a solid performance, with the budgetary deficit lower than projected and the primary budgetary balance surplus exceeding estimates.
