World Bank2013-08-272013-08-272002-07-30https://hdl.handle.net/10986/15377Over the last ten years, the need for sustainable tax revenues has become clear, in order to provide more public expenditures in areas such as, poverty alleviation, health, education, and infrastructure, as well as for payment of the recent social security reform, and banking sector support. The report examines the key problems in Mexico's tax, and revenue system, identifying administration as the weakest factor in its tax system, where such weakness has contributed to political resistance in broadening the tax base. In addition, the system relies heavily on oil revenues, only about thirty percent of the total, and dependent on world prices, thus, the rest of the economy will have to bear a larger tax burden as a share of GDP. Meanwhile, various exemptions, and special regimes erode the base of the most important taxes - Value Added Tax (VAT), corporate, and personal income taxes, and, most tax decisions, and the derived political consequences, continue at the national level, while the delivery of services is increasingly devolved to sub-national levels. Within the reform options, the most relevant fall in three areas: national tax policy, administration, and inter-governmental fiscal relations, where the central theme is to improve revenue capacity, efficiency, and horizontal equity of the system, by simplifying laws, eliminating exemptions, and facilitating compliance, and enforcement. Such reform strategy will be successful if implemented in a coordinated way, by reducing evasion, and improving collection; by the already implemented income tax reform (end of 2001), although the VAT and petroleum taxation remain on the agenda for future action; and, by the State cooperation in the tax reform program, to improve enforcement, particularly the VAT.en-USCC BY 3.0 IGOCOUNTRY ECONOMIC WORKTAX REFORMSPUBLIC EXPENDITURESTAX REVENUESPOVERTY ALLEVIATION MECHANISMSHEALTH CARE DELIVERYEQUITY IN EDUCATIONINFRASTRUCTURE DEVELOPMENTSOCIAL SECTOR REFORMSOCIAL SECURITY SYSTEMSBANKING SYSTEMSSOCIAL SECURITY FINANCEADMINISTRATIVE CAPABILITYPOLITICAL CONSTRAINTSTAX BASESOIL REVENUESTAX BURDENSTAX EXEMPTIONVALUE ADDED TAXESCORPORATE TAXATIONPERSONAL INCOME TAXREFORM POLICYFISCAL CONSOLIDATIONLEGAL FRAMEWORKLAW ENFORCEMENT ACCOUNTABILITYACCOUNTINGADVERSE EFFECTSAGRICULTUREALLOCATION OF RESOURCESAUDITINGBANKING SECTORBASIC EDUCATIONBUDGET EXPENDITURESBUDGET PROCESSBURDEN OF TAXESCAPITAL GAINSCAPITAL MARKETSCASH-FLOWCITIZENSCONSTITUTIONCONSUMERSCONSUMPTION TAXESCORPORATE INCOME TAXCORRUPTIONCROWDING OUTDEBTDECREEDEMOCRATIC PROCESSDEVOLUTIONDIVIDENDSDRINKING WATERECONOMIC COOPERATIONECONOMIC EFFICIENCYECONOMIC GROWTHECONOMIC SECTORSEQUALIZATIONEVASIONEXCISE TAXESEXPENDITURE RESPONSIBILITIESEXPENDITURESEXPORTSFACTORINGFEDERAL GOVERNMENTFINANCIAL RESOURCESFISCALFISCAL DEFICITFISCAL INCENTIVESFISCAL MANAGEMENTFISCAL POLICYFISCAL PROBLEMSFISCAL REFORMFOREIGN INVESTMENTFREE TRADEGDPGOVERNMENT RESOURCESGOVERNMENT REVENUESGOVERNMENT'S BUDGETGROSS NATIONAL PRODUCTGROSS REVENUEGROSS REVENUESHEALTH SERVICESHORIZONTAL EQUITYHUMAN DEVELOPMENTHUMAN RESOURCEHUMAN RESOURCE DEVELOPMENTHUMAN RESOURCESINCOMEINCOME GROUPSINCOME INEQUALITYINCOME LEVELSINCOME SUPPORTINCOME TAXESINDEXATIONINEFFICIENCYINFLATIONINFORMAL SECTORINSTITUTIONAL DEVELOPMENTINTEREST INCOMEINTEREST RATEINTEREST RATESINTERGOVERNMENTAL FISCAL RELATIONSINVENTORYLABOR MOBILITYLAWSLEGAL PROVISIONSLEGISLATIONMANDATESMUNICIPAL PROPERTYMUNICIPALITIESNATIONAL LEVELNATIONAL TAXESNET WORTHOILOIL PRICESOIL SECTOROPERATING COSTSPENALTIESPER CAPITA INCOMESPERSONAL INCOME TAXESPOSITIVE EFFECTSPOVERTY ALLEVIATIONPRICE DECLINESPRICE FLUCTUATIONSPRIVATE SECTORPROVISIONSPUBLIC EXPENDITUREPUBLIC HEALTHPUBLIC SECTORPUBLIC SERVICESPUBLIC SPENDINGRESOURCE USERETAIL SALES TAXRETAINED EARNINGSRETIREMENTREVENUE CAPACITYREVENUE COLLECTIONREVENUE GROWTHREVENUE SOURCESROYALTYSALES TAXESSOCIAL PROGRAMSSOCIAL SECURITYSOCIAL SECURITY REFORMSOCIAL SERVICESSUBNATIONAL GOVERNMENTSSUBSIDIARIESSUBSIDIARYTAXTAX ADMINISTRATIONTAX ADMINISTRATIONSTAX AUTHORITYTAX BURDENTAX BURDENSTAX COLLECTIONTAX COLLECTIONSTAX COMPLIANCETAX EXPENDITURESTAX LAWTAX OBLIGATIONTAX OBLIGATIONSTAX PAYMENTSTAX POLICYTAX RATETAX RATESTAX REFORMTAX REFORMSTAX RETURNSTAX REVENUETAX REVENUESTAX SYSTEMTAXATIONTECHNICAL ASSISTANCETOTAL REVENUETRANSACTION COSTSTRANSPARENCYTRANSPORTVALUE ADDEDVALUE ADDED TAXESWAGESWEALTHWorld Bank10.1596/15377