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[PARAMETERS]

REVENUE

20.8%% GDP

EXPENDITURE

23.0%% GDP

IN-DEBT-EDNESS

2.2%% PIB
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DEBT per capita 2023

$300,000

DEBT per capita 2030

$300,000

REVENUE

20.8%% GDP

EXPENDITURE

23.0%% GDP

IN-DEBT
EDNESS

2.2%% GDP
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1 - Labor-based taxes

GDP Account Tax Revenue
(% of GDP)
Effective rate (%)
Wages and salaries*
(23.764% of GDP)
Income tax (wages) 0.000%
Self-employment
labor income
(13.243% of GDP)
Income tax (mixed) 0.000%
Wages and salaries
(28.407% of GDP)
IMSS contributions 0.000%
Labor-based income**
(42.007% of GDP)
Labor-based taxes

Effective rate = (Tax Revenue/GDP account)*100
* It excludes social security contributions.
** It includes labor taxes on production.

3 - Capital income taxes

GDP Account Tax Revenue
(% of GDP)
Effective Rate (%)
Private companies
and NPISH (27.878% of GDP)
Corporation income tax
0.000%
Private companies
and NPISH (27.878% of GDP)
Other revenues
0.000%
Capital incomes
(38.268% del PIB)
Capital taxes

Effective rate = (Tax Revenue/GDP account)*100
All values are net from depreciation.

2 - Consumption taxes

GDP Account Tax Revenue
(% of GDP)
Effective Rate (%)
Household consumption*
(43.953% of GDP)
VAT 0.000%
Vehicle purchases
(2.441% of GDP)
New vehicles tax 0.000%
Household consumption
(63.763% of GDP)
Excise tax (no gasolines) 0.000%
Consumo hogares e ISFLSH
(63.763% del PIB)
Excise tax (gasolines) 0.000%
Consumo hogares e ISFLSH
(63.763% del PIB)
Imports 0.000%
Household consumption
(63.763% of GDP)
Consumption taxes

Effective rate = Revenue/GDP account*100
* Does not include food or health services.

3 - IMPUESTOS E INGRESOS AL CAPITAL

GDP Account Own revenues REVENUE
% del PIB
Effective Rate (%)
Public capital revenues
(5.706% del PIB)
Mexican Petroleum Fund 0.000%
Public capital revenues
(5.706% del PIB)
IMSS 0.000%
Public capital revenues
(5.706% del PIB)
ISSSTE 0.000%
Public capital revenues
(5.706% del PIB)
CFE 0.000%
Public capital revenues
(5.706% del PIB)
PEMEX 0.000%
Capital income*
(38.268% PIB)
Total public capital revenues

Effective rate = (Tax Revenue/GDP account)*100
All values are net from depreciation.

1 - Education

EXPENDITURE BY LEVEL STUDENTS EXPENDITURE
(% of GDP)
Per cápita
(MXN 2023)
Basic 22,205,284 1.99
Upper secondary 5,327,676 0.41
Higher 3,909,391 0.52
Postgraduate 150,458 0.03
Adult 135,020 0.03
Other Education Expenditures 31,727,829 0.03
TOTAL 31,727,829 3

Per capita = Annual expenditure/Students

2 - Health

EXPENDITURE BY INSTITUTION NUMBER COVERED EXPENDITURE
(% of GDP)
Per cápita
(MXN 2023)
SSA (no social security) 131,230,540 0.212
IMSS-Bienetar 74,975,933 0.5
IMSS 47,957,896 1.20
ISSSTE 7,248,925 0.23
Pemex, ISSFAM 1,047,786 0.09
TOTAL 128,116,912 3

Per capita = Annual expenditure/Number covered

3 - Pensions

EXPENDITURE BY INSTITUTION PENSIONERS EXPENDITURE
(% of GDP)
Per cápita
(MXN 2023)
Bienestar pension 12,297,833 0.17
IMSS 4,433,030 1.67
ISSSTE 1,241,236 0.90
Pemex, CFE, LFC, Ferronales, ISSFAM 181,290 0.27
TOTAL 18,153,389 3

Per capita = Annual expenditure/Pensioners

4 - Other expenditures

EXPENDITURE Population EXPENDITURE
(% of GDP)
Per cápita
(MXN 2023)
CFE 131,230,540 2
Pemex 131,230,540 2
SENER and others 131,230,540 2
Infrastructure 131,230,540 2
Debt service 131,230,540 2
Other ear-marked
and non-ear-marked
expenses
131,230,540 2
Other expenses 131,230,540 2
TOTAL 128,116,912 3

Per capita = Annual expenditure/Population

5 - Basic universal income

Basic universal income POPULATION EXPENDITURE
(% of GDP)
Per cápita
(MXN 2023)

126,942,437 0%

Per capita = Annual expenditure/Population

Crecimiento del PIB Guardar cambios save Reestablecer refresh

TEST

Macroeconomic Framework
Year
GDP Growth (%)
Inflation (%)
2022
2023
2024
2025
2026
2027
2028
Public Debt

©2023 | CIEP Fiscal Simulator

Fiscal Incidence

How much would households contribute?

Source: Prepared with the CIEP Tax Simulator v5.

Decile Annual contribution
by household
(MXN 2023)
Distribution
(%)
% of household annual income
I -$9,000    
II -$9,000    
III -$9,000    
IV -$9,000    
V -$9,000    
VI -$9,000    
VII -$9,000    
VIII -$9,000    
IX -$9,000    
X -$9,000    
Nacional -$9,000    

That will depend on the obligations and benefits

By adding all contributions paid and subtracting all public expenditure received, we obtain the net contributions in our simulation. The hope is for income redistribution to be progressive: those with the most should contribute the most, and those with the least should receive the most.

The first column indicates the household income decile. The second column is a household’s average yearly aggregate contribution. The third column shows how contributions are distributed across households. The fourth column calculates the contribution as a proportion of household income.

Fiscal Life Cycle

How would people contribute?

Source: Prepared with the CIEP Tax Simulator v5.

That will also depend on their life cycle

Firstly, the way people produce and consume changes at each stage of life. The young go to school or university, adults go to work, and older people start to retire. This pattern is similar all over the world.

Secondly, gender roles, wage differentials, and unequal opportunities between men and women also affects economic behavior and tax obligations. Here we summarize intra-household transfers (e.g. from parent to child, if they live together) and inter-household transfers (e.g. from grandparent to grandchild, if they do not live together).

Projection of fiscal contributions

Because demographic transition exists and is difficult to reverse

Since the 1970s, there has been a continual increase in the Mexican population aged 16 to 65 years as a result of a phenomenon known as a “demographic dividend”. This means there are more potential workers and fewer economic dependents.

However, depending on fiscal commitments toward young people (like education) and the elderly (like pensions), net contributions may reach a maximum one year. In other words, there is a possibility that at one point, there will be more people requiring public services and fewer people contributing through tax.

Will contributions reach a maximum?

Source: Prepared with the CIEP Tax Simulator v5.

+ Revenue

How much funding will be available?

Source: Prepared with the CIEP Tax Simulator v5.

All revenue in the budget should be taken into account

Taxes on labor-based income and on consumption are influenced by the composition of the population and its productivity. Taxes and income from capital depend on economic activity.

With the effective rates modelled for the different components of GDP, demographic transition and economic growth, the amount of public resources available can be projected into the future. This amount should be sufficient to support government spending.

- Expenditure

All government obligations should be taken into account

Health, education, pensions, basic universal income, the Bienestar pension and other expenses are also driven by the composition of the population. The repayment and financial cost of debt include components relating to balance, interest rates, and exchange rates.

Simulating the per capita expenditure incurred by government commitments makes it possible to project the level of resources needed in the future. Expenditure should not exceed government revenue.

What commitments must be met?

Source: Prepared with the CIEP Tax Simulator v5.

= Debt

Would it be sustainable in the long term?

Source: Prepared with the CIEP Tax Simulator v5.

To prevent subsequent changes in revenue and/or expenditure

The long-term debt trend represents the government’s capacity to meet its obligations given its capacity to raise revenue. A stable, or ideally downward, trend is desired.

An increasing debt can mean generational inequity: spending future resources that have not yet been generated. Unsustainability would mean passing on the burden of debt to future generations, who may not benefit from it.

Fiscal redistribution

How do public resources flow?

Source: Prepared with the CIEP Tax Simulator v5.

Taxpaying
population
Revenue (flows as a % of GDP) Public
expenditure
Beneficiary
population

This is the beginning and end of the tax system

People are the beginning and the end. They are the basis and target of the tax system. It is individuals who produce public resources and who receive and benefit from them.

On the far left of the chart, households contribute taxes and public revenue. In the middle, the tax system consolidates all these funds. On the far right, implemented policies and programs redistribute resources to households and other systems.