"Elimination of gasoline subsidies raises concern and debate in Mexico."

The recent decision by the Ministry of Finance and Public Credit (SHCP) to eliminate subsidies for Magna, Premium, and diesel gasoline for the week of September 7 to 13 has generated various reactions among citizens and economic sectors in the country. This measure, which comes just days before the national holidays, marks a significant change in the fiscal policy related to fuels, which has been a hot topic in public and political debate in Mexico. During the current year, Magna gasoline had enjoyed small subsidies on its Special Tax on Production and Services (IEPS) rates, while Premium gasoline and diesel had not received any incentives since the beginning of 2024. Now, the amount charged per liter of Magna gasoline will be 6.17 pesos, while the rate for Premium gasoline will be set at 5.21 pesos and 6.78 pesos for diesel. This decision, which directly impacts the final cost that consumers pay for these fuels, is a cause of concern for many. The elimination of the subsidy occurs in a context where oil prices and their derivatives have shown some stability. Despite this, the SHCP explains that subsidies are implemented as a measure to cushion the effects of possible increases in international oil prices, which are closely linked to the Mexican economy. In fact, the country’s dependence on imported fuels from the United States means that any fluctuation in the international market can have immediate repercussions locally. An interesting point is that, despite the elimination of these subsidies, the SHCP has managed to maintain a steady flow of tax revenue. This is because, in times of stable prices, the government prefers to charge the full IEPS rates, which represent an important source of income. For citizens, however, this decision represents an increase in transportation costs and, consequently, a potential impact on the cost of living, given that fuels are a crucial component in the supply chain of goods and services. The situation is even more complex considering the current economic context in Mexico. In a period where inflation remains a looming concern, increases in fuel prices could exacerbate the situation. Productive sectors, which rely on transportation and logistics, may also feel pressured to pass these costs onto consumers, potentially resulting in widespread price increases. It is important to note that gasoline prices in Mexico are already relatively high compared to other countries in the region. According to data from the PETROIntelligence agency, the average price of Magna gasoline was reported at 24.11 pesos per liter, while the Premium was 25.59 pesos, and diesel reached 25.64 pesos. This scenario raises questions about the competitiveness of the Mexican economy and the impact on citizens' purchasing power. The IEPS rates are published weekly in the Official Gazette of the Federation and have a maximum amount that is determined annually. This dynamic creates uncertainty among consumers, who must stay alert to changes in fuel prices, which can vary quickly. The lack of subsidies at this critical moment could be seen as a government strategy to consolidate its tax revenue base, but it could also have negative consequences for household economies. As the national holidays approach, many Mexicans are preparing for trips and celebrations, which will inevitably increase the demand for gasoline. The elimination of the subsidy could be a deterrent for those planning long trips, complicating mobility during a period where family tradition and celebration are fundamental. In this context, the debate over fuel subsidy policy in Mexico intensifies. Many citizens are questioning whether this measure is the most appropriate or if, on the contrary, it is another blow to their already struggling economy. The SHCP, for its part, will need to weigh public reactions and the effects of this decision in the short and medium term while continuing to seek a balance between tax collection and the welfare of the population.