Reforming Mexico’s Fiscal Federalism

In 2007, a tax reform program was designed with the goal of strengthening Mexico’s fiscal position. It was based on four pillars: (i) increasing tax collections, (ii) improving spending structure and efficiency, (iii) improving tax management, and (iv) strengthening fiscal federalism. Although federalism was not the original objective of the reform, the government also decided to move ahead in strengthening the revenues of subnational administrations as part of its plan to increase state financial capacity and manage a series of problems arising in the country.