Oil, Income Tax Revenues Continue To Sustain Federal BudgetBy Anamary Olivas | Thu, 09/01/2022 - 09:26
Oil and income tax collection continues to sustain Mexico’s budget revenues, according to the Public Finance and Public Debt Report from the Ministry of Finance and Public Credit (SHCP) for July 2022. These two sources have been the most prolific for some years now and continue to be, even as soaring oil prices caused the government to lower its taxes on fuels, a situation that benefit oil revenue but harmed the gains from income taxes.
From January to July of this year, budget revenues totaled just over US$188.57 billion, which represented a growth of 5.3 percent compared to the same period last year. The growth in income is mainly due to oil revenues which, in recent months, have gained more income for the public treasury thanks to the increase in the international price of crude oil. In total, in the first seven months of the year, oil revenues reported an annual growth of 39.3 percent.
PEMEX's total revenues increased 88.6 percent year-over-year owing to a recovery in the price of the Mexican export mix. As of June 30, the average Mexican crude oil export mix price was US$98.86/b, an increase of US$33/b compared to 2021’s average Mexican crude oil export price. Analysts projected an increase in the cash flow of the state company during this quarter, resulting from high oil prices that mostly remained above US$100/b. The company had already seen a significant increase in its revenue during the past quarter.
In addition, given the better-than-expected performance of the cost of a barrel of oil, surplus revenues of US$6.6 billion were obtained in the period. In the case of income tax revenue, an important growth of 1 percent compared to the same period in 2021 was observed. However, the total tax revenue obtained in the period did not meet expectations, and the revenues for this were below the forecast for the period. This was mainly explained by the fiscal incentives that the government grants to the IEPS of gasoline. Nevertheless, income tax continues to surprise. From January to July, it gain additional income of US$6 billion pesos, with which it reported a collection of 15.3 percent more than from January to July of the previous year.