The stability in oil prices drives historical revenue from IEPS in Mexico.

The stability of oil and fuel prices worldwide has had a significant impact on tax revenue in Mexico, particularly regarding the Special Tax on Production and Services (IEPS) applied to gasoline. In the first four months of the year, the Ministry of Finance and Public Credit (SHCP) has experienced a 173% growth in the collection of this tax, thanks to a higher tax burden on Magna, Premium gasoline, and diesel. According to figures provided by the Ministry of Finance, between January and April 2024, 126,819 million pesos were collected, representing more than half of the total amount collected in 2023 for IEPS on gasoline, which amounted to 230,082 million. This increase in revenue is largely due to the elimination or reduction of tax incentives that the Ministry used to grant on the IEPS rate, thus collecting the tax in full. Ramses Pech, an analyst in the energy and economics industry, highlights that, if the current trend continues, revenue from IEPS on gasoline could reach 350,000 million pesos, representing a milestone in the country's fiscal history. The stability in oil prices and the decision not to grant tax incentives have been determining factors in this increase in revenue. The mechanism of granting discounts on IEPS rates aims to cushion the effects of possible increases in oil prices, mainly from the United States, Mexico's main fuel supplier. Conversely, when prices remain stable, the Ministry collects the IEPS rate in full or with small discounts, contributing to tax revenue. IEPS rates are adjusted weekly and published in the Official Gazette of the Federation, establishing a limit amount to be applied the following year. During the first four months of 2024, a significant increase in IEPS rates for Magna gasoline, Premium, and diesel has been observed, impacting the final price of these fuels. The possibility of applying the IEPS rate at 100% to gasoline raises concerns about potential upward pressure on fuel prices in Mexico. Compared to the same period last year, an increase in the price of Magna gasoline has been observed, surpassing the accumulated inflation rate, resulting in a 5.2% increase. In summary, the record revenue collected by the Ministry in the first four months of the year through IEPS on gasoline highlights the importance of oil price stability and fiscal policy implementation. However, the impact of this increased revenue on consumers' wallets and the economy in general is an aspect that deserves detailed analysis and public debate.