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When Harmful Tax Expenditure Prevails over Environmental Tax: An Assessment on the 2014 Mexican Fiscal Reform

Department of Applied Economics, ICEDE, University of Santiago de Compostela, 15701 Galicia, Spain
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Academic Editors: Baojie He, Ayyoob Sharifi, Chi Feng and Jun Yang
Sustainability 2021, 13(20), 11269; https://doi.org/10.3390/su132011269
Received: 8 September 2021 / Revised: 29 September 2021 / Accepted: 9 October 2021 / Published: 13 October 2021
(This article belongs to the Topic Climate Change and Environmental Sustainability)
This article examines the role of environmental taxation in mitigating environmental problems and contributing to sustainability in Mexico. It focuses on environmental tax revenues and tax expenditures since the 2014 Public Financial Reform (PFR), according to pro- or anti-environmental orientation. The research carried out combines the study of the regulation of the selected tax instruments, their classification and the empirical analysis of the tax revenues and tax expenditures associated with the different taxes over the periods of validity of the taxes and benefits studied, using the databases of the CIAT and the Mexican SHCP. A critical analysis addresses the weak environmental function of environment-related taxes (IEPS, ISAN…), as well as the late implementation and reduced impact of the carbon and pesticide taxes introduced in 2014. The evolution of tax incentives and expenditure is thoroughly examined by examining both environmental measures, which have evolved positively but within a very reduced level, and the most prevalent tax expenditure measures, with harmful impacts to the environment. Based on the results obtained, long-term structural changes in the Mexican tax system are suggested. As for the short to medium term, profound changes in tax expenditure are proposed to eliminate of those tax benefits harmful to the environment, introduce of tax benefits for circular activities (e.g., repairing, reusing and remanufacturing) and broaden the carbon tax base and rates. The conclusions include recommendations for moving towards a systemic green tax reform that assists the transformation towards a sustainable economy. View Full-Text
Keywords: environmental taxation; tax benefits; tax expenditure; carbon tax; harmful tax expenditure environmental taxation; tax benefits; tax expenditure; carbon tax; harmful tax expenditure
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MDPI and ACS Style

López Pérez, S.d.J.; Vence, X. When Harmful Tax Expenditure Prevails over Environmental Tax: An Assessment on the 2014 Mexican Fiscal Reform. Sustainability 2021, 13, 11269. https://doi.org/10.3390/su132011269

AMA Style

López Pérez SdJ, Vence X. When Harmful Tax Expenditure Prevails over Environmental Tax: An Assessment on the 2014 Mexican Fiscal Reform. Sustainability. 2021; 13(20):11269. https://doi.org/10.3390/su132011269

Chicago/Turabian Style

López Pérez, Sugey d.J., and Xavier Vence. 2021. "When Harmful Tax Expenditure Prevails over Environmental Tax: An Assessment on the 2014 Mexican Fiscal Reform" Sustainability 13, no. 20: 11269. https://doi.org/10.3390/su132011269

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