Treasury raises complementary fiscal stimuli to all fuels

In its second week of implementation, the Ministry of Finance and Public Credit (SHCP) increased the amounts of the complementary fiscal stimulus granted to gasoline, after the price escalation that has been observed in recent days.

For the week of March 12 to 18, the complementary fiscal stimulus was activated for all fuels, that is, Magna, Premium gasoline and diesel, this after the government granted them 100% of the already existing fiscal stimulus.

With this, Magna gasoline will stop collecting 5.4917 pesos per liter of IEPS, while a complementary fiscal stimulus will be granted for 3.8741 pesos per liter.

Meanwhile, for Premium gasoline, which for the first time has a 100% fiscal stimulus, 4.6375 pesos per liter will not be collected, and the complementary benefit will mean 2.7480 pesos.

Regarding diesel, 6.0354 pesos per liter will not be collected, while the complementary fiscal stimulus will cost 5.2380 pesos.

A few days ago, the Treasury implemented a new mechanism to prevent the increase in the international price of oil – caused by Russia’s invasion of Ukraine – from affecting the pockets of gasoline consumers.

“During the first weeks of 2022, prices have had additional increases due to geopolitical tensions in Eastern Europe and the Middle East. The prices of automotive fuels are related to the international prices of fuels and crude oil, as well as to the exchange rate, so the increase in these elements has led to an increase in the stimuli applicable to these fuels, which can reach 100% of the quotas”, stated the decree.

This complementary stimulus will be in force until December 31, 2024, that is, it will last for the remainder of the Andrés Manuel López Obrador administration, and will be activated every time the IEPS fiscal stimulus reaches a rate of 100 percent.

It can be credited against ISR

According to what has been published, the amount of the fiscal stimulus, corresponding to all the liters of fuel disposed of, may be credited against the ISR payable by the taxpayer in the provisional payments or, credited against the VAT and even be able to reach a return in case there is a surplus that has not been credited.

Cost of up to 2% of GDP

So far, the Ministry of Finance has not revealed estimates of what this new complementary stimulus could cost the public treasury; however, some specialists have pointed out that the tax waiver could be 1% of the Gross Domestic Product (GDP).

According to an analysis by Bank of America Securities, the cost to the treasury of the existing fiscal stimulus plus the complementary one could be up to 2% of GDP.

Meanwhile, in Banco Base they foresee that the complementary stimulus will have a cost of 330,000 million pesos, an amount that exceeds, for example, the 200,000 million pesos that it would cost to implement a National Care System.

“Assuming that the additional stimulus on gasoline and diesel is maintained for the rest of the year, the estimated cost would be 330,000 million pesos, equivalent to 5.36% of budget revenue for 2022, or 1.26% of GDP,” he commented. Gabriela Siller, director of Economic and Financial Analysis of Banco Base.

The analyst added that this stimulus, which is granted to importers and producers, is expected to be transferred throughout the supply chain and, therefore, result in lower prices for consumers; however, this will ultimately depend on market structures and competition.

Gasoline has become more expensive 43%

So far this year, given the existing geopolitical tensions and the still economic recovery after the impacts of Covid-19, the price of the Mexican oil mix has risen 47.23 percent.

At the end of last year, the mixture was sold at 71.29 dollars per barrel; while on Friday it was quoted at 104.96 dollars.

On average, the Mexican mix has been sold for $86.71 per barrel so far this year, which exceeds the Treasury Department’s estimate of $55.1, so excess oil revenues are expected this year.

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