Progress in Mexico

National PEMEX should be opened to the PI and to apply VAT to everything: OCED The progress of the people By: Carlos Damian May 19, 2013 The economic acting of Mexico was mediocre in the last years Mexico. - The economic acting of Mexico in it finishes in last decade, it “was mediocre”, and to revert that tendency, they are necessary “big structural reformations" that go from the opening of Mexican Petroleum (Pemex) to the private capital to the application of a tax to the basic consumption of goods that today is exempt, it recommended the organization for the Cooperation and the Economic Development (OECD). To remove all the excuses in the collection from the tax to the added value would have an “impact on the poorest population", Sean Dougherty recognized he’s main economist of the organism for Mexico. "However, many of the excuses in the collection of that tax go today to the population of more entrance." The reformation of the energy sector, dominated by the two state companies PEMEX and the Federal Commission of Electricity (CFE), it should be taken “farther away” of the changes introduced in 2008 that improved the corporate government of the company, they endowed it of operative autonomy and of a régime for the recruiting of goods and services, the OCED indicated. "However these reformations should be taken farther, even through a constitutional amendment that allows sharing the risks and the benefits with the private sector. A more competitive environment for PEMEX could generate market incentives adapted to improve its efficiency, although the regulation should also be enlarged to include the supervision of the new participants", it pointed out the study about Mexico of the OCED. Insurance of unemployment According to the current secretary of the OCED, Mexican Jose Angel Gurria that previously was Minister of Treasury in the former president's government Ernesto Zedillo, he sends "recommendations", as if they discovered the ‘black thread’; they also recommend the creation of an unemployment insurance, so that a person doesn't fall in the informality when losing the employment, because one of the factors of the economic inequality is the risk of losing the employment. They consider that the current system of pensions (read Afore Co.) it is designed in such a way that grants benefits to the groups of more entrance in the country, (and it is a fantasy that works for the workers and employees, they can to future to receive a null pension or nothing at all when arriving to the 60 year-old age). The Mexicans bigger than 65 years have double risk of falling in the poverty that the population in age of working. It is due to that the pension’s system grants benefits to the groups of higher revenues, located in the formal sector, so much public as private, while it leaves unprotection to the vulnerable workers, in general belonging to the informal sector. In accordance with official figures, six of each ten Mexicans in age of working they make in the informal economy. "With a population that ages to such a quick speed there is a serious risk that the proportion of old men in condition of poverty increase more The amplification of covering of the program 70 and more, and the reduction of the age of eligibility of 65 to 70 years, with the purpose of including more grown-ups, according to the current government's plans, would be a viable form to combat the poverty in the third age, although to get moves permanent sources of financing it would be a prerequisite", it thought about in the study. Another mechanism outlined to attack the problem of the informality, is the creation of a mechanism of protection before the unemployment. This would reduce the risk of the informality after the loss of the employment that is an important taxpaying factor to the inequality in Mexico." Given the weakness of the fiscal revenues, any reformation of this type would require a meticulous design. A less expensive possibility would be the introduction of a system of accounts of saving singular arranged with a component of public insurance for those who lost its employment and they didn't have enough savings, like it happens in Chile. The federal government's structural reformation One still has margin to allow bigger participation of the private sector in the oil industry in charge of Pemex, by means of the change of the bid bases and the recruiting outlines, as well as of the implementation of contracts of incentives to attract “qualified partners” that have a proven technical capacity to take advantage of the opportunity. This declaration maintains it, OCED in an evaluation that it carries out every 18 months. President EPN's government, it has established that the OCED call it an “ambitious program of economic and social reformations", for those that, it assures the organism, “it has obtained a wide political support". The drop collection of taxes is explained according to the study of the OCED, for the prevalence of excuses and special regimens in the systems of on the rent, to the companies and physical people, as well as the VAT that they are equal to 3.1 percent of the GDP, or around 16 percent of the real public revenues. They can be considered tributary expenses: it appraises zero for foods (included those elaborated) medicines, and other excuses as the educational and medical services, rates reduced in the frontier, among others. "The reformations could begin with the elimination of the potential lagoons, such as the frontier rate and the lack of retention of import taxes for the industry assembly plant. The basket of products examine again that they have rate zero or they are exempt, since the social objectives are assisted better through direct transfers", it intends in the study. The tax rate to the added value is of 16 percent and of 11 percent in the border fringes. The organism has invented the black thread when “recommending” the fiscal reformation that the government cooks in big recipients, with big quantities of money to convince to political and strange that will approve in the second semester of the year 2013, be revised the excuses or rates zero that exist in the collection from the VAT to some goods. It doesn't list them, but at the moment the goods that they don't pay tax to the added value or they have a rate zero for the final consumer they are among others: foods, medicines, books, medical services and grants. The VAT in this country surrenders less due to numerous excuses to big capitals, to transnational Mexicans and foreign, besides escapes and refunds of taxes to the power mediatic. The coefficient of efficiency of the VAT that is a measure so much of the fiscal expenses (they exempt and special regimens), as of the escape it is a common practice in Mexico. This special regimen of taxes is a factor that they diminish the fiscal revenues in around 1.5 percent. The corporations obtain more than $5 trillions a year; they pay 1.7% of taxes The 400 big companies of Mexico obtain revenues for more than a half trillion dollars a year and they pay to Treasury less than 1.7 percent, “and that that they pay it is a unconscious common word, because at the end until they return them the taxes, like in the case of Televisa Co". AMLO. The former presidential candidate demanded to finish with the fiscal privileges that benefit people like the owner of Televisa Co., Emilio Azcarraga Jean (EAJ), and it was pronounced because they pay more taxes who win more. It also criticized the dependent SAT brand of SHCP, when condoning more than 200 million dollars to Televisa Co., and it expressed that the fundamental thing is to capitalize to Treasury is “to charge obligations to the potentates that don't pay anything". It is not possible that in Mexico, EAJ pays less taxes, in proportional terms that a small manager or a worker; that is not possible". He remembered that the Federation plans to elevate the tax of the VAT from the 16 to 19 percent and to apply it to medicines and foods". He remembered that during Luis Echeverria Alvarez government (1970-1976) a mechanism denominated fiscal consolidation was impelled that it favored to big corporations, and it mentions that if it removed such a disposition would enter to the Federal Treasure property at least 700 thousand million dollars more". It is not necessary to remove it their money to less favored people by means of more fiscal loads, but rather they should finish with these apparatuses and fiscal privileges for the oligarchy. (La Jornada, politica, p.p. 12-. 21, May 17, 2013).