Mexico | Gasoline subsidy: an alternative

Summary

Given the significant increase in global oil prices and, therefore, in gasoline, the Mexican government decided not to pass on this cost to consumers by subsidizing its price.

Key points

• Key points:
• First, by stopping collecting the special tax (IEPS) on fuels and then even applying a negative rate to said tax.
• The Ministry of Finance estimates that this year the cost of subsidizing gasoline will be 397.6 billion pesos, equivalent to around 1.4% of GDP.
• Had it not been for this policy, this year's inflation rate would have been at least two percentage points higher.

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