Dora Villanueva

La Jornada newspaper
Friday May 29, 2020, p. twenty

An increase in the presence of the Mexican State as a provider of greater well-being in the population with quality public services involves raising taxes, moving towards a more normal, modern, and less oil-dependent fiscal model, explained José Ángel Gurría, secretary General of the Organization for Economic Development Cooperation (OECD).

If we do not want to increase public debt, (because) we are fiscally responsible, we have to maintain public spending of around the amount we receive so as not to have many deficits and we condemn ourselves to having a small State, he declared during the videoconference. the Covid-19 crisis. Recommendations for Mexico.

In the speech delivered from Paris, the former secretary of the Treasury stressed that Mexico has the lowest collection rate in the region, at 16 percent of gross domestic product (GDP), practically half of the 34 percent that the OECD averages. In addition to broadening the tax base, he recommended strengthening the Tax Administration Service to reduce tax evasion.

The global economy is not expected to rebound in the short term. The return to normality will be long, waiting for second waves of the disease and a medicine or vaccine to combat the new coronavirus, he considered. For this reason, there are no happy accounts to be made in the recovery process. All fiscal, monetary, and credit resources must be used, because 2020 will be one of the most challenging years in history for all government and society.

Decarbonize the economy

That is the global context, but the Covid-19 pandemic reached Mexico at a time that was already difficult: contraction, declining investment, uncertainty about trade negotiations with North America and sub-exercises. Even so, in the OECD we expected that in 2020, after some of these elements had passed, an upturn of 0.7 to 1.4 percent would be seen in growth. And the coronavirus arrived.

Now, beyond the fall of 2020, at the end of next year the economy will be smaller than in December 2019, two years of decline. That’s how dramatic the impact will have been, he said.

In making 11 proposals to strengthen the Mexican response to the crisis, he considered it a false dilemma to opt for support for a single sector. He said that while there are ethical, moral, political, and economic imperatives to start with the most vulnerable, after them, companies must also be supported.

Finally, after Vanessa Rubio, Deputy Secretary of Finance in the presidency of Enrique Peña Nieto, questioned the oil dependence on the fiscal design of the current government, Gurría settled with a “mea culpa on behalf of all the governments of the Republic, we are guilty of not having resolved this in time, “he said to the now senator.

First for not modifying the tax scheme and second for owing Petróleos Mexicanos to support federal spending. We generated an artificial loss to the company. If the government restored surplus over what would have been normal taxation, Pemex would not have this enormous amount of debt.

Among the other recommendations I call to decarbonise the economy; protect social protection systems and health expenditures; equip people with information technology and training in the matter; invest in science and technology and reduce informality, reduce informality, reduce informality.

Mexico has been reborn several times, but this crisis requires unprecedented effort, he added.