President Andrés Manuel López Obrador rules out tax reform because in his opinion it is unnecessary to generate additional resources through taxes

09/07/2021

The fiscal reform, one of the most important reforms required by the country to strengthen its weakened public finances, has been left adrift after President Andrés Manuel López Obrador ruled out its implementation because it is related to tax increases.

The president of the recently created Working Group for the Tax Transition in the Chamber of Deputies, Alfonso Ramírez Cuéllar, assured in an interview that after the head of state's statements, the future of this reform is now in the hands of the next legislature.

Between January and May 2021, Mexico's fiscal balance was in deficit by 112,723 million pesos (mdp), according to the Ministry of Finance. The federal government refused to give fiscal support to the productive sector to overcome last year's economic crisis for fear of generating imbalances in public finances.

López Obrador's government promised that there would be no increase or creation of taxes in the first half of his six-year term. As this time is about to arrive, the progress of tax reform has been confirmed by the head of the Ministry of Finance, Arturo Herrera, and Raquel Buenrostro, head of the Tax Administration Service (SAT).

Prior to the mid-term elections, specialists in tax matters referred that the approval of tax reform would depend on the composition of the Chamber of Deputies, where Morena, the party related to the Executive, lost legislative power after the votes.

The country would lose the opportunity to generate an extra 200,000 million pesos in tax collection by reinforcing actions for companies to effectively pay income tax on their profits. In addition to reviewing federal tax expenditures, especially for tax exemptions.

By Mexicanist