Tax reform: A necessary discussion in the new normal

Abstract

The pandemic in Latin America has revealed the weakness of its public finances to face the situation, even though several of the countries in the region have made significant progress in terms of collection. Mexico is no exception and, on the contrary, in terms of tax revenues it has shown little progress despite the various reforms that have been implemented in the recent past. The health crisis makes a tax reform necessary in the country, not immediately, but if it is necessary and should emphasize the construction of one, with a medium and long term view to cover the demand for public spending and reversing the history of low revenue the country has faced for at least the last 50 years. This document explores basic theoretical aspects and experiences of Latin America aimed at vitalizing the discussions in the construction of said reform. Additionally, the relationship between tax revenues and GDP is estimated with a structural rupture model to get an idea of what the fall in public revenues may be in the coming months.