The Resource The environmental tax and subsidy reform in Mexico

The environmental tax and subsidy reform in Mexico

Label
The environmental tax and subsidy reform in Mexico
Title
The environmental tax and subsidy reform in Mexico
Creator
Subject
Language
eng
Summary
While price regulation caused fossil fuels in the Mexican energy markets to be sold at subsidised rates until mid-2014, recent reforms first reduced subsidies and then increased taxes on the main transport fuels. Mexico also introduced a carbon tax that applies to most fossil fuels, but at modest rates. This paper analyses the Mexican environmental tax reform, considering a broad set of dimensions of policy reform and highlighting trade-offs among them. The Mexican reforms significantly improve the extent to which the external costs of energy use are reflected in prices and increase government revenues, both welcome developments from an environmental and public finance perspective. The gradual transition towards higher taxes had initially increased the political acceptability of the policies, but, as price deregulation progresses further, more attention may need to be devoted to analysing and addressing the policies' distributive effects. Other policy changes that are currently discussed, such as moves towards carbon trading, could make it worthwhile to consider additional trade-offs among the framework dimensions. These changes may increase complexity and they could also result in higher administrative and compliance costs, reduce the environmental effectiveness of the policy and lead to lower revenues. More generally, the Mexican moves from fuel subsidies to carbon prices represent a considerable policy effort, insights from which could be relevant for a wider set of countries. The analysis also highlights that ease of administration and collection are an important property of carbon taxes, which appears highly desirable, especially in emerging market contexts
http://library.link/vocab/creatorName
  • Arlinghaus, J
  • Van Dender, K
Geographic coverage
  • Latin America
  • Central America
Index
no index present
Language note
English
Literary form
non fiction
Series statement
OECD Taxation Working Papers
Series volume
no. 31
http://library.link/vocab/subjectName
  • environmental tax
  • tax reform
  • fuel tax
  • energy industry
  • energy tax
Label
The environmental tax and subsidy reform in Mexico
Instantiates
Publication
Extent
28 p.
Label
The environmental tax and subsidy reform in Mexico
Publication
Extent
28 p.

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