Introduction
In the midst of a stagnant Mexican economy, a contrastingly positive figure has emerged: record-breaking tax collection by the Mexican Tax Administration Service (SAT).
Record-breaking Tax Collection
During the first quarter of 2025, despite the overall economic stagnation, Mexico narrowly avoided technical recession with a mere 0.2% growth rate.
Simultaneously, the SAT reported a staggering 2 trillion 17,536 million pesos in tax revenue for the same period. This figure represents a 9.9% increase compared to the first quarter of 2024 and a nominal growth of 247,953 million pesos.
From January to April, the SAT collected 1 trillion 171,684 million pesos in income tax (ISR), marking a 136,904 million peso increase and a real growth of 9.1% compared to the same period in 2024.
Value-Added Tax (IVA) revenue reached 537,251 million pesos, an increase of 82,762 million pesos and a real growth of 13.9% compared to the same period in the previous year.
The Impuesto Especial sobre Producción y Servicios (IEPS) revenue totaled 217,479 million pesos, 9,400 more than the same period in 2024.
Efficiency and Digitalization
Despite potential calendar-related positive effects on revenue, the SAT’s enhanced efficiency under Antonio Martínez Dagnino’s leadership is evident. Over the past decade, tax collection has been strengthened through digitalization of payment processes and miscellaneous fiscal reforms.
The number of taxpayers increased by 1.71 times from the third quarter of 2024 compared to 2020, and revenue efficiency rose by 241.3% between 2018 and 2024.
Economic Growth Concerns
The significance of economic growth for higher or lower tax contributions cannot be overstated.
Historically, Claudia Sheinbaum’s government inherited the lowest economic growth rate in a sexennium, with annual growth below 1%. Looking ahead, the outlook is grim.
Contrary to official projections estimating a growth rate between 1.5% and 2.3%, most non-governmental and private analyses have downgraded their PIB growth forecasts.
BANXICO reduced its projection from 1.2% to 0.6% in February, while Banamex adjusted its forecast from 0.2% to 0% in March.
Most forecasts anticipate either minimal or no growth, raising concerns about the sustainability of the extraordinary tax collection.
Challenges to Sustained Tax Collection
Several factors threaten the prospects for sustained tax collection, including:
- Trade Uncertainty: US tariffs have created uncertainty in international trade.
- Fiscal Efforts: The Mexican government aims to reduce the fiscal deficit from nearly 6% to 4.9%.
- Weak Internal Demand: Private consumption and investment have experienced significant declines since the second quarter of 2024.
Should growth targets not be met, tax revenue will decrease, potentially causing fiscal imbalances and necessitating further budget cuts or increased debt.
Key Questions and Answers
- What does the record-breaking tax collection mean for Mexico’s economy? It indicates enhanced SAT efficiency, but the sustainability of this trend depends on economic growth.
- How has the Mexican economy performed recently? The economy has experienced stagnation with a growth rate of just 0.2% in the first quarter of 2025.
- What factors threaten the sustained tax collection? Trade uncertainties, fiscal efforts to reduce deficits, and weak internal demand pose significant challenges.
