Thursday, April 29, 2010

Now's the Time

OECD President José Ángel Gurría, a Mexican national, says that now is for Mexico to embrace a lasting fiscal reform:
Fiscal reform is the great pending task for Mexico. It's a maxim that we have been hearing for years, but it is more pressing than ever in the present context. Despite some signs of economic recovery, the budget deficit and the need to protect those sectors most affected by unemployment and economic contraction make the modernization of our fiscal system especially urgent. The global crisis offers a unique opportunity in our history to carry out this reform that are nation so needs.


Lastly, the government must offer results as far as spending efficiency. To convince the population of the importance of fulfilling their fiscal obligations they have to demonstrate that paying taxes brings results and contributes to improving everyone's quality of life. It's not about only assuring that each peso that is spent has a maximum impact on benefits and social services, but also guarantee that spending is fairer and more equitable. While taxes and transfers contribute to reducing the Gini coefficient from 47.6 to 28.2 on average in OECD countries, in Mexico it has only dropped from 51 to 49.4...our fiscal system doesn't diminish the differences in the level of income.

It's important to point out that important steps have been taken in recent months. The introduction of additional fiscal charges to the wider tax base, such as the single-rate corporate tax [IUTU], is good news. Despite that, they remain partial and short-term solutions, with an impact in terms of efficiency and cost of implementation that must be carefully examined.

The global economic crisis offers a unique opportunity to sidestep party interests and pass a thorough fiscal reform that allows us to a consolidate a stronger, cleaner, and fairer economic and social model..Our time is up and there's no alternative.

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