On August 19, Scotiabank México warned that the country has 17 years left before its population pyramid reverses, the deadline it sets for a substantive fiscal reform. Eduardo Suárez, the bank's LATAM Economic Research director, called for a federal pact among all three levels of government to make it viable.
The announcement came at the presentation of Scotiabank's T-MEC Perspectives, a forum for evaluating North America's trade relationship. The newspaper El Economista reported on the same event and quoted Suárez and Rodolfo Mitchell, director of Economic and Sectoral Analysis, in their reading of the agreement's future. Suárez noted that since the social security reforms of 1997 and 2020, Mexico has not undergone a deep reform, and that recent changes have not touched the logic of taxation or the distribution of public spending. He also argued that only some local governments collect property taxes effectively while others collect nothing at all, an imbalance that, according to the bank, will condition how pensions and services are funded as the population ages.
Suárez was direct on the point: "Mexico has never carried out a tax reform; we have made changes, but not to the logic of taxes, the federal pact, and the distribution of spending." He warned that "tax reform is a federal pact," one that defines how much revenue-raising effort state and municipal governments make relative to the federal government. He also drew a clear distinction between adjustment and reform: "a fiscal adjustment is for the coming year, but a tax reform is not a miscellaneous bill; it is about thinking through the logic of taxation." The bank recommended following the examples of Poland and Ireland and underscored the inertia of public spending as the country's demographics shift.
The statement frames an ongoing debate over how tax revenue is distributed among the federal government, states, and municipalities, a debate that will persist as the economic package and T-MEC negotiations advance. Suárez himself put it plainly: the longer the delay, the harder it will be to sustain public finances once the population pyramid reverses.
This article was written with artificial intelligence assistance based on verified sources and reviewed by a human editor before publication.