Tax Agenda Targets High-Emissions Luxury Transport in Mexico

Environmental organizations have proposed creating new environmental taxes on transportation, particularly targeting luxury tranports such as private jets and yachts, to fund Mexico’s policies to confront the climate crisis.

Following the conclusion of the COP30 climate summit in Brazil, the Alliance for Fiscal Justice (AJF) presented on Tuesday the booklet, Greener, Fairer: Taxes that Protect the Planet and People. The document calls for action on the triple environmental crisis: climate change, pollution, and biodiversity loss. The initiative aims to tax activities with the highest environmental impact, such as transportation, and allocate those resources to climate mitigation and adaptation.

The AJF notes that the so-called green taxes already in place in Mexico, carbon taxes, those focused on the transportation sector, and taxes linked to the protection of ecosystems and biodiversity, have the potential to contribute to environmental protection. However, the core problem, it stresses, is the current lack of clarity about how the collected revenue is used. Funds go into a general pool, without certainty that they are applied to environmental protection or to offset the polluting activities being taxed, underscored Sophia Appl, Technical Coordinator, AJF.

The fiscal proposal addresses day-to-day problems with major environmental impacts, such as traffic congestion, by supporting alternatives like public transportation and the use of bicycles and other non-motorized transport. In this sense, it proposes implementing congestion charges for using the most congested roads in Mexico’s major metropolitan areas.

According to the document, establishing a congestion fee could, on the one hand, ease rush-hour traffic and, on the other, reduce the air and noise pollution caused by the excessive use of private vehicles. It also stresses that these measures must incorporate progressive criteria, such as exemptions for low-income households. In addition, any congestion charge must be accompanied by substantial improvements to public transportation and an increased supply of bicycles, along with dedicated bike lanes.

Another central component of the proposals focuses on increasing taxes on luxury transportation. Diego Merla, Fiscal Justice Strategy Coordinator, Oxfam Mexico, stressed that any discussion of environmental justice must also address the environmental inequalities present in the country.

“The investments of Mexico’s three richest individuals pollute as much as the 17 million poorest people. What do these three richest Mexicans consume? Luxury cars, jewelry, but also private jets and yachts,” Merla said. He emphasized that a private jet pollutes in one hour of flight what an average Mexican emits in an entire year, making such measures indispensable.

The initiative proposes designing and implementing a special fee structure specifically for private jets, in addition to the Airport Use Fee (TUA). The charge would be based on the social cost of carbon and the average emissions generated by private aviation. According to the AJF, emissions from private aviation increased by 46% between 2019 and 2023. At the global level, after the United States and Brazil, Mexico is the country with the third-largest number of private jets.

In the case of yachts, special tariffs should be introduced that are closer to international standards, initially in ports that cater to luxury tourism, such as Cancun and Los Cabos. Mexico’s docking fees are among the lowest in the world. For example, in Cozumel’s marina in 2024, docking at a pier cost MX$20 per day per foot of length. By contrast, docking fees in Los Angeles or Florida range from US$120 to US$240 per foot, up to 240 times higher than the rate charged in Cozumel.

The AJF highlighted that these proposals do not pose a risk of regressivity, as only the highest-income population uses these forms of transportation. Merla emphasized that the richest 1% of the country pollutes as much as the poorest 80%, urging the adoption of a progressive fiscal reform targeting this small segment of the population. “We need to focus on luxury goods such as cars, jewelry, art, jets, or yachts. In a climate crisis of this magnitude, what justification is there for private jet flights unless they are for an emergency?” he said.