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Improving Fiscal Federal Relations for a Stronger Mexico

Listed author(s):
  • Aida Caldera Sánchez


Mexico has achieved a high degree of decentralisation in public services, but the Mexican fiscal federal system has important shortcomings. States and municipalities have become heavily dependent on federal transfers to finance a growing share of public spending. This leaves the burden of raising tax revenues falling almost exclusively on the federal government and reduces incentives for efficient spending and active tax collection at the subnational level. It can also lead to moral hazard and fiscal slippages. The federal government should harden the budget constraint on sub-national governments by limiting further increases in transfers and avoiding extraordinary transfers. Promoting the implementation of stronger fiscal rules, such as rules on deficits and debt ceilings, could also help to harden budget constraints and to ensure greater fiscal discipline. States should be given more taxing powers, if they are to collect a larger share of total revenues. Greater accountability and clarification of spending responsibilities could also contribute to improve the efficiency of spending among states and municipalities. Améliorer les relations budgétaires fédérales pour renforcer l'économie Mexicaine Le Mexique a poussé très loin la décentralisation des services publics, mais le système budgétaire fédéral présente des déficiences importantes. Les États et les communes sont désormais très tributaires des transferts fédéraux pour financer une part croissante des dépenses publiques. De ce fait, c’est sur l’État fédéral que repose presque exclusivement la tâche de lever l'impôt et l'échelon infranational est peu incité à dépenser efficacement et à recouvrer activement des recettes fiscales. Cette situation peut aussi générer un aléa moral et des dérapages budgétaires. L'État fédéral devrait exercer une plus forte pression budgétaire sur les entités infranationales en limitant les nouvelles hausses des transferts et en s'abstenant de consentir des transferts exceptionnels. L'application de règles budgétaires plus strictes, comme des règles en matière de déficits et le plafonnement de la dette, pourrait aussi accentuer les contraintes et assurer une plus grande discipline dans ce domaine. Pour être en mesure de recouvrer une plus grande partie des recettes publiques totales, les États doivent se voir accorder plus de pouvoirs en matière fiscale. Davantage de responsabilisation et une clarification des attributions sur le plan des dépenses seraient aussi de nature à améliorer l'efficience de ces dernières au niveau des États et des communes.

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Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 1078.

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Date of creation: 23 Aug 2013
Handle: RePEc:oec:ecoaaa:1078-en
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