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Redistributive Impact and Efficiency of Mexico’s Fiscal System

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  • John Scott

Abstract

A comprehensive tax and benefit incidence analysis is presented covering the redistributive fiscal instruments implemented in Mexico in 2008 and 2010, representative of the urban and rural sectors, as well as nationally. The expansion of basic social programs and effectively targeted direct monetary transfers have increased the progressivity of Mexico’s fiscal system in recent years. However, the overall redistributive impact of this system is limited by a comparatively unproductive tax system, a comparatively small share of resources allocated to direct transfers, and a significant share of spending tied to instruments with low redistributive effectiveness (subsidies to contributory social security systems, generalized consumer subsidies, and tertiary public education). The transition to a more effective and equitable fiscal system will require a comprehensive tax–benefits reform designed to improve tax productivity and benefit equity, combining a broad tax base with universally accessible public services and social protection.

Suggested Citation

  • John Scott, 2014. "Redistributive Impact and Efficiency of Mexico’s Fiscal System," Public Finance Review, , vol. 42(3), pages 368-390, May.
    • Handle: RePEc:sae:pubfin:v:42:y:2014:i:3:p:368-390
    DOI: 10.1177/1091142113497394
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    References listed on IDEAS

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    1. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747.
    2. Paul Johnson & Gareth Myles, 2011. "The Mirrlees Review," Fiscal Studies, Institute for Fiscal Studies, vol. 32(3), pages 319-329, September.
    3. Kristin Komives & Todd M. Johnson & Jonathan D. Halpern & Jose Luis Aburto & John R. Scott, 2009. "Residential Electricity Subsidies in Mexico : Exploring Options for Reform and for Enhancing the Impact on the Poor," World Bank Publications - Books, The World Bank Group, number 5959, December.
    4. Nora Lustig & Carola Pessino & John Scott, 2014. "The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay: Introduction to the Special Issue," Public Finance Review, , vol. 42(3), pages 287-303, May.
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