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IMF Welcomes Mexico's Fuel Tax Reform

by Mike Godfrey, Tax-News.com, Washington

19 November 2015


The International Monetary Fund has welcomed Mexican fiscal reforms, which are aimed at strengthening Government finances.

A rise in non-oil tax revenues due to the 2013 tax reform and higher fuel excises have largely offset the four percentage points of gross domestic product (GDP) decline in oil revenues over the last two years, the Fund said in its 2015 Article IV Consultation report.

The IMF "strongly endorsed" the Government's plan to fix the rate of the Special Tax On Production and Services (IEPS) applicable to gasoline and diesel on an annual basis. The IMF said that this is in line with its recommendation to increase carbon taxes in Mexico to discourage the use of fossil fuels. It noted that Mexico had the lowest carbon taxes on fossil fuels among Organisation for Cooperation and Development (OECD) countries as of 2014.

In addition to helping reduce Mexico's carbon emissions, fixing fuel excises per unit of fuel will help stabilize tax revenues in the medium term relative to the current scheme of variable excises, the report said.

TAGS: tax | economics | fiscal policy | revenue guidance | gross domestic product (GDP) | International Monetary Fund (IMF) | Mexico | excise duty | carbon tax | tax reform | Tax

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