History of Mexico’s Tax Regime: a Haphazard Journey.

Authors

Nicolás José Muñiz, WPP

Abstract

Mexico’s tax regime can best be described as haphazard and uncoordinated, as indirect levies were often assessed to satisfy short-term needs, irrespective of the economic capacity to pay of the local population. When compared to other members of the OECD, Mexico reports a relatively low tax-to-GDP ratio. This may be attributable to the vast presence of small to medium size companies conducting business in the informal market, the comparatively minor percentage of individuals and companies that regularly pay tax, and proliferation of tax benefits historically enjoyed by the wealthy.

This Article covers the more salient features of Mexican tax legislation since the conquest by Spain in 1521 until the nation obtained its full independence three hundred year later, and all throughout the political and economic upheavals the young republic experienced right up until the end of the twentieth century. Levies enacted by the Spanish Crown to extract revenues are examined, along with indirect assessments on consumption promulgated after independence. Also addressed are alternative levies enacted since the early twentieth century that failed to raise revenues and/or were administratively burdensome, ultimately leading to their extinction.

The author recommends streamlining Mexico’s tax system by expanding the base, and eliminating the various exclusions, preferences, and credits currently available under the income tax law. By increasing revenues from income tax, the federal government should be better able to reduce indirect levies on the sale of goods and services. Simultaneously, political leaders should lessen the country’s century-old dependence on non-fiscal revenues derived from oil production.

Recommended Citation

Nicolás José Muñiz, History of Mexico’s Tax Regime: a Haphazard Journey., 55 U. MIA Inter-Am. L. Rev. 297 (2024)
Available at: https://repository.law.miami.edu/umialr/vol55/iss2/3