Introduction
In the beginning of 2026, Mexico’s gasoline prices have remained stable despite an increase in the IEPS (Impuesto Especial sobre Producción y Servicios), a tax on the production and services. The Mexican government did not provide any fiscal stimulus to offset this tax hike, which has been absorbed by Pemex, the state-owned petroleum company.
Background on IEPS and its Impact
The IEPS is a crucial tax in Mexico, as it accounts for approximately 40% of the government’s total revenue. This tax is levied on various products, including fuels, which directly affects gasoline prices. When the government increases the IEPS, it typically results in higher fuel costs for consumers.
Pemex: The State-Owned Petroleum Company
Pemex is the largest company in Latin America and one of the most important sources of employment and revenue for Mexico. It is responsible for exploring, extracting, refining, and marketing oil and natural gas. Given its significant role in the Mexican economy, any changes in fuel prices due to tax adjustments have a substantial impact on the country’s consumers and businesses.
Government’s Decision Not to Grant Fiscal Stimulus
In a surprising move, the Mexican government decided not to provide any fiscal stimulus packages to help consumers cope with the increased IEPS on gasoline at the start of 2026. This decision has led to stable gasoline prices, as Pemex absorbed the tax hike instead.
Implications for Consumers and the Economy
The stability in gasoline prices is a relief for Mexican consumers, who have seen fluctuations in fuel costs due to various factors in recent years. However, the lack of fiscal stimulus may have indirect consequences on other sectors of the economy, as businesses and industries dependent on transportation might face increased operational costs.
Key Questions and Answers
- What is IEPS? IEPS (Impuesto Especial sobre Producción y Servicios) is a significant tax in Mexico, accounting for around 40% of the government’s total revenue. It is levied on various products, including fuels, and its adjustments directly impact gasoline prices.
- Who is Pemex? Pemex is Mexico’s state-owned petroleum company, responsible for exploring, extracting, refining, and marketing oil and natural gas. It is a crucial source of employment and revenue for the country.
- Why didn’t the government provide fiscal stimulus? The Mexican government decided not to grant any fiscal stimulus packages at the beginning of 2026 to offset the increased IEPS on gasoline. This decision led to Pemex absorbing the tax hike, keeping gasoline prices stable.
- What are the implications for consumers and the economy? Stable gasoline prices benefit Mexican consumers, who have experienced fuel cost fluctuations in recent years. However, the absence of fiscal stimulus might indirectly affect other sectors reliant on transportation, potentially increasing their operational costs.
