How much does VAT revenues cost in Mexico?

Abstract

The low levels of tax revenues in the developing countries have limited the capacity of their governments to redistribute income, provide public godos and generate economic growth. According to Dubin, et. al. (1990) tax revenues will increase if the government increases the enforcement spending. However, if the return of the enforcement spending is low, it might be better to increase the severity of the penalties and sanctions, since it accounts for minor costs. Therefore, only when we know the yield of the enforcement spending in terms of tax revenues we can decide to what extent it will be profitable to raise the amount of resources devoted to enforce tax compliance. This is relevant for any developing country, where the scarcity of the resources is greater than in developed countries. The present paper estimates the return of the enforcement spending in terms of VAT revenues for the case of Mexico, using the model of Engel et. al. (2001). The results are compared to the case of Chile. To our knowledge, there is no evidence of any work that has made this kind of analysis for the case of Mexico. The differences between the return of the enforcement spending in these two countries is explained by the gap in the administrative efficiency between the SII (Internal Tax System in Chile) and SAT (agency that is in charge of the tax administration in Mexico). There is a lot to learn from the Chilean experience: At the beginning of the nineties in Chile, VAT evasion was approximately 30 percent, while at the end of the decade this rate dropped to 18.3 percent. This goal was achieved through improvements both in enforcement and in the administrative efficiency of the SII. In fact, administration expenditure as a percentage of net tax revenues in Chile in 1998 was lower than in many other OCDE countries: it accounted for 0.73 percent. The paper provides some suggestions to improve tax administration in Mexico according to the latest modifications, both in the law and in the practice, during the Fox administration. The results of this paper represent the starting point in the debate about how to construct an administrative reform to increase both SAT’s internal and external efficiency.

Para Dubin, et al. (1990) los ingresos tributarios aumentarán en la medida en la que el gobierno aumente el gasto para la fiscalización de los impuestos. Sin embargo, aumentar la severidad de las multas y sanciones puede resultar una mejor opción pues éstas acciones no implican desembolsar recursos Esta cuestión es relevante, particularmente en países como México, donde los recursos son más escasos en comparación con cualquier país desarrollado. Este trabajo estima el rendimiento del gasto en fiscalización para la recaudación del IVA en México. Los resultados son comparados con el caso de Chile. Estas diferencias en la rentabilidad del gasto en fiscalización son explicadas por la brecha existente entre la eficiencia administrativa del SII y el SAT. Así, estos resultados son el punto de partida en la discusión sobre cómo diseñar una reforma administrativa en el SAT que mejore su eficiencia tanto interna como externa.