Tax write-offs are only for the wealthy

The Calderón and Peña Nieto administrations canceled debts worth millions

Tax write-offs are only for the wealthy
Singers, Politicians, TV hosts, and companies benefited from these tax write-offs - Photo: Edgard Garrido/REUTERS
English 03/10/2019 09:10 Mexico City Editorial Actualizada 09:16
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Millions of Mexicans pay taxes on time because they are captive taxpayers: every two weeks, their taxes are deducted from their paychecks by their employers, nevertheless, there is a smaller group who are granted preferential treatment by authorities, which exempts them from paying millions in taxes.

After four years in court, Fundar, an NGO, obtained the list of people and companies who benefited from tax cuts and whose MXN $274,000 million debt was canceled. At least 7,885 people and companies received this preferential treatment between January 2007 and May 2015.

Strictly speaking, this is not illegal because the tax write-offs were based on what was established in the Federal Revenue Law and the Federal Tax Code. What is questionable is the no so transparent decision making behind the tax waivers, as well as the amounts. How to explain that only 8 of the beneficiaries concentrate 21% of the total debt that was canceled, which amounts to MXN $36,845 million?

In recent years, large companies have invested a lot of resources to hire experts who are able to find legal voids in tax laws in order to pay fewer taxes or pay nothing at all.

At the same time, Mexico is known for its low tax collection levels since it is behind other Latin American countries. As a result, the two previous administrations improved the system, in order to increase the collection levels and achieved a modest increase. These tax collection levels would have been higher if all taxpayers had been treated the same way.

Furthermore, tax evasion also eliminates the possibility of obtaining resources and allocating them to eradicate economic and social lags.

The names of those who benefited from tax write-offs were revealed only once a judge ordered releasing the list. Verdicts like this contribute to consolidating transparency mechanisms.

This case should also be used to remember the importance of having access to government information. Civic surveillance is a tool that can help to eradicate corruption and impunity in Mexico.
 

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