The public spending that is being allocated to the pensions of the IMSS, ISSSTE, Pemex, CFE and the Pension for the Well-being of the Elderly (PBAM) implies that a comprehensive tax reform must be carried out, according to specialists, during the second day of Social Security Week activities in the Chamber of Deputies.
For this year, the expenditure on contributory and non-contributory pensions (PBAM) is more than 1.66 trillion pesos, which would be equivalent to 5.2% of the Gross Domestic Product (GDP), according to data from the Ministry of Finance and Public Credit.
Federico Rubli Kaiser, a specialist in macroeconomic analysis and former general coordinator of strategic planning and special projects at Consar, declared that pension spending is a commitment that simulates “a tight straitjacket” to allow room for other federal government spending.
“(Pension spending) is a very strong restriction. Hence the importance of evaluating this expense for the future. Once again we must insist on a broad context of tax reform”, said Rubli at the table “Reflections on the individual accounts system and welfare”.
The former official specified that the cost of the PBAM for this year alone is close to 340,000 million pesos, which absorbs 25% of the total pension expenditure.
“It is expected that in the budget for the coming year, the amount will be 424,000 million pesos. So this represents a very important and substantive fiscal cost, so planning to generate resources for its financing is crucial. Hence, we cannot separate the issue of what we have to do in pensions, from the question of generating the income that the government needs for it”, said the specialist.
Saúl Escobar Toledo, a member of the Citizen Labor Observatory, pointed out during his participation that “a profound tax reform is needed. Nothing can work in this country without a fundamental tax reform, neither pensions, nor health, nor education, nor urban infrastructure”.
Escobar Toledo mentioned that “nothing can work without the reform guaranteeing two fundamental things: that those who earn less pay less and that those who earn more pay more.”
“The tax structure is very unfair, those who earn less pay a lot and those who earn more pay little. The second issue is that the mega-rich of this country be taxed, those who earn immense amounts of money and that it will only be 1% of the population,” said the also researcher at the National Institute of Anthropology and History.
National Pension System
Federico Rubli mentioned that it is necessary to create a National Pension System that integrates the four pillars that govern all pension systems in Mexico. In addition, to create a framework law on the subject to have adequate regulations.
Today the pillars are very fragmented, therefore integrating them would give a synergy. The four pillars in Mexico are non-contributory; the obligatory distribution; the compulsory one for individual accounts, and the voluntary one.
In the country there are close to 3,000 pension schemes that are not connected to each other, which increases the cost of granting pensions since different coverages are presented.
