[SNR] Tax Structural Reform for Mexico

In an event to explain the claim of the Chihuahua Government to the Federation for nonpayment of committed resources, citing the cause of opposition of said Federation to a series of corruption investigations by the Chihuahua Government to the previous executive administration, brought a specific issue as a highly relevant task.

It was proposed to formulate an organizational work around making a tax reform, covering both the income part (commonly called tax reform) and expenditure part (under the fiscal equity clamor, transparency and corruption elimination and public management resources discretion.

In Solo Negocios interview at different media, it has been commented for more than 6 months, about the imperative need for a structural reform, which has already been claimed in the past: in 2010 by the group of 6 (http://contaduriapublica.org.mx/grupo-de-los-seis-propuesta-de-reforma-fiscal/), or Coparmex with "Sociedad en Movimiento" in 2005, and in general by many other organizations and interested in the subject.

The current situation that raises the imperative need for this structural reform lies in several elements:

• The first, the US tax reform, which makes it more competitive in that country, to attract investment in Mexico, as when a customer becomes a competitor. This is not absolute and it is necessary to see real effects once the benefits of the reform and the comprehensive comparison of the tax operation in the US are applied. and Mexico. But if the possibility of even a world battle of tax reforms and Mexico comes up, although it does not have to lower nominal rates, it could require adjusting effective rates.

• The second, regarding tax expenditure equity. Mexico is a Republic with a Federal organization and must continue to support itself among those who have more towards those who have less, even at government levels. But this can not mean an eternal or distorting burden where the purchasing power of the contributor tends to nullify. It's about sharing the wealth, not poverty. Therefore, it is urgent to change the way in which money is distributed among Mexicans. In addition to this, we must seek greater financial autonomy of the various entities, be states or even municipal ones.

• The third, regarding the lack of transparency in the resource management. In August 2016, SHCP indicated that Mexico did not have to or how to make a tax reform with respect to the US, because it did not have where to obtain the resources required for the federal government operation, the resources to states and municipalities, other powers and pre-established obligations. In essence, the tax discussion always revolves around a fixed topic; the expenditure is untouchable. And that is the first mistake that is made, because it is not justified an expenditure of 5 trillion pesos (federal budget 2017), and that has been growing year after year above inflation, and in the end, Mexicans are not noticing advances given the alleged expense in favor of us.

• And finally the fourth, linked to the governor of Chihuahua claim, there should be no carrot as a prize or stick as a sanction, when a subnational entity legally and morally questions a federal entity or vice versa and the same between spheres of governmental power (legislative, executive, judicial and autonomous agencies). Public resources should not be assigned in proportions linked to the political party colors, or other distortions. They must be assigned with transparency, legality and absolute justification of need and social cost-benefit.

Therefore, given the political times, it is necessary that the Mexican business and professional organizations, be organized in favor of creating a series of general recommendations and modifications of the Mexican tax system, to make it part of the electoral political agenda to the diverse candidates that on July 1, will compete for popular election in Mexico, so that once they are elected, they will take a stand on September 1 for the new Congress to begin the deliberations and have the tax reform approved by December 1, when the new federal Executive enterse, publish it and enter into force on January 1, 2019.

Do not waste time, technique and aspirations to a better Nation, they must prevail.

Alejandro Sandoval-Murillo

Solo Negocios