select

Universidad del Valle de México’s Center for Public Opinion Releases Latest Report

Report focuses perceptions of citizens and experts on the new tax reforms in Mexico

07/11/2013


Universidad del Valle de México’s Center for Public Opinion Releases Latest Report

The most recent study by the Center for Public Opinion at the Universidad del Valle de Mexico shows that in the perception of expert analysts and the public the proposed tax reform passed by Congress will not improve the situation in the country.

The impact of tax reform on Mexico

According to the telephone survey, only 71% of the population knew that the tax reform was passed and of this 71%, 40% believe that the country will be worse than before, while 28% think that the country will remain the same, 23% were confident that the reform will help the country to do better and 10% said they did not know what impact the reform would have.

Statistically significant differences were recorded for groups depending on their party identification. Those who identify with the PRI (37%) are the only ones who believe that the country will do better than before, while those who show no party identification are those who are least convinced of the benefits of reform. (51%)

Experts, meanwhile, point out that the reform will have economic impacts in the short term that may even lead to a recession; there are no incentives for growth or to help combat the informal economy. This is a major shortcoming in a country with 12 million people in the informal economy.

Reviews around the Tax Reform

According to the experts, the positives of the reform are the fact that resources are being put to address problems and progress has been achieved in certain aspects such as the management of the tax authorities and reducing state control. However, negative perceptions stand out more because they believe that the reform does not attack the structural problems and did not benefit from feedback of business leaders, which generates discontent and widening polarization. It also does not support the National Development Plan since it does not enhance productivity.

Four areas of opportunity are highlighted: the technical aspects of implementation, administration and interpretation, the lack of clarity regarding public expenditure, lack of incentives for the formal market and the fact that the there are no measures to ensure the funds being sought will be collected.

According to OECD data, Mexico is 106 of 181 in ease of paying taxes and in 2009 28.2% of the working population was part of the informal sector, deficiencies that are particularly relevant to the Reform.

Perceived benefits from the proposed tax reform

Experts say it is difficult for the general public to fully understand the implications of the tax reform because the population is not educated in financial matters. This view seems supported by hard data found in the survey, as only half of the population recognized that people benefit from people paying taxes. Only a quarter of the population thought the reform would benefit individuals, families and society if passed, and 15 % said they had no idea what would happen.

Opinion regarding the fate of the proceeds from the tax collection


Experts believe that if something is missing from this reform it is the precise definition of public spending. Meanwhile, 64% of the population had no idea what tax money was used for and 75% thought it was not being used properly.

Tax reform and review the actions of the government of Enrique Peña Nieto

6 out of 10 Mexicans disapprove of the actions of the Government of Peña Nieto, with significant differences between groups with different party identification.

Those who approved the government's actions are more positive about the impact of tax reform on the situation in the country, while those who disapprove of the country believe that the reforms are going to leave the country worse off.

Experts believe that the tax reform "fell short" and is unresponsive to the needs and expectations of the country. Especially since it does not encourage economic growth and job creation and that is the only viable way to bring Mexico and Mexicans to a state of being.

Methodology

The study was conducted in two phases: a quantitative phase via telephone survey (332 respondents) and a qualitative phase of in depth interviews with experts.

This article has been translated into English to be shared on the Laureate International Universities website.