Despite a drop in tax collection, the Treasury applies 100% of the fiscal stimulus to fuels for the fourth consecutive time

The Ministry of Finance and Public Credit (SHCP) extended the 100% fiscal stimulus to gasoline and diesel until April 8, in addition to complementary incentives, despite the 60.5% drop in tax collection levels during the first two months of the year for the Excise Tax on Production and Services (IEPS).

The Treasury announced that starting this Saturday, April 2 and until Friday, April 8, taxpayers will not have to pay the Excise Tax on Production and Services (IEPS) and will also have additional incentives ranging from 1.16 pesos to 3.18 pesos per liter of fuel.

In this way, low-octane gasoline will be exempt from IEPS payment of 5.49 pesos per liter, Premium 4.63 pesos and diesel 6.03 pesos.

Some financial experts point out that this type of fiscal stimulus is actually a government subsidy to keep the price of fuels low, since the real price of fuel is determined by the international crude market.

This is the fourth consecutive week that finance authorities give 100% fiscal stimulus to Magna, Premium and Diesel gasoline as a mechanism to absorb the impact of the international oil rise and to some extent contain inflation in our country, which according to figures from the Bank of Mexico, stood at 7 .29% until the first half of March 2022.

The Treasury reported that in 2022 our country collected 18,855 million pesos for IEPS applied to fuels, which was 25,715 million pesos less than the same period last year.

Prior to the Banking Convention held last week, Treasury Minister Rogelio Ramírez de la O assured that this fiscal gap is covered by surplus revenues generated by oil exports, whose current price is around $100 per barrel. However, Petroleos Mexicanos acknowledged that in the first months of this year our country produced about 1.5 million barrels a day.

Ramírez de la O assured that these fiscal stimuli could be applied for the rest of 2022 to prevent gasoline from suffering a significant increase and affect the purchasing power of Mexican families, which would result in higher inflation and a fall in domestic consumption.

This week, the Bank of Mexico raised the interest rate to 6.5 points in order to contain inflationary pressure. In this regard, the deputy governor of Banxico, Gerardo Esquivel, considered that from his personal perspective, inflation will begin to fall by the end of 2023 to reach the 3% target by the first quarter of 2024.

Petroleos Mexicanos highlighted that the import of gasoline has been gradually reduced and that this week Mexican refineries currently produce around 300,000 barrels per day of this type of fuel.

Mexico relies heavily on gasoline produced in the United States, where inventories dropped 2.9 million barrels in the last week to 238 million barrels. For this reason, President Biden could free up part of strategic oil reserves to increase refining capacity by almost 300,000 barrels a day as a measure to curb the rise in price for consumers, who have also suffered an increase in inflation.

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