Friday, September 4, 2009

PRI's Economic Plan

The plan, which was presented in the wake of Calderón's informe, calls for no new taxes but purports to close the fiscal gap by reducing tax evasion. How will it do that? Through mandating prison sentences for Hacienda officials who abet underpayment or non-payment of taxes.

This seems wholly unserious. It's not that tax evasion shouldn't be addressed, nor should new taxes necessarily be imposed, but this is like the Republicans who say that government will be shrunk not by cutting programs but by eliminating waste. Not going to happen. Based on what people who have to deal with Hacienda tell me, the essential problem for tax election is one of culture. Tax collectors and their targets often treat tax payment as something akin to a bargaining session at a downtown market. You can't monitor every taxpayer/taxman thoroughly enough to make the punishment uniformly applied and therefore an effective incentive to modify behavior that has persisted for decades. At least not to the tune of tens of billions of dollars. I'd also add that you should think twice about going from something that is wink-wink OK to a jailable offense in such a short time, but I guess any anti-corruption effort implies some of that.

The article linked above says also that the PRI supports incorporating a balanced budget requirement into the federal budget law, which likewise seems a totally ill-fitting, unrealistic approach to the problems of the day.

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