Lucía C. Pérez Fragoso and Francisco Cota González
Income distribution in Mexico, as in many Latin American countries, is very unequal. Nearly 43 per cent of the population lives below the poverty line, according to the National Institute of Statistics (INEGI 2006). This presents fiscal policy-makers with the challenge of financing economic growth and social welfare at a time when total financial resources are insufficient to meet the country's social protection needs. In part, this reflects a long-standing reluctance by Mexican policy-makers to confront the need to address the problem of growing income inequality through a more equitable tax policy.
In examining the options for such a policy, this chapter looks at the current tax structure and its impact on different household income groups and considers several ways in which tax policy might be revised in order to lessen the burden on the lowest income households. It also examines the ways in which current tax policy differentially affects men and women, particularly in lower-income households. Finally, it offers a series of recommendations for modifying both personal income tax and indirect taxation in order to expand social protection to all income groups.
Gender research on taxation, as on other economic topics, strengthens economic analysis, since it provides insights into how public policies reinforce or dismantle traditional gender roles. A gender analysis questions the assumed neutrality of tax policy. Gender analysis of taxation seeks to understand the impact of taxation on diverse households and social groups by taking into account the different roles that women and men perform in the economy.
In analysing tax policy from a gender perspective, the first task is to establish whether a given tax has a similar impact on women and men, given their respective economic situations, as, for example, differences in jobs, markets and salaries, as well as ownership over productive assets. These factors influence the amount of tax owed. This differential economic power will also affect men's and women's ability to identify and take advantage of tax loopholes. For example, as men are often paid more, they are more likely to be able to hire expensive lawyers and accountants who can help them devise ways to avoid paying taxes.