Although the exercise of Pre Criteria of Economic Policy for 2023, has the purpose of providing the macroeconomic framework that serves as a basis for the various entities of the Federal Public Sector to start their budget exercise for 2023, which must be turned over to Congress to no later than September 8 of this year, it is also an important element of economic planning for the current year, because it is used to review the evolution of the parameters that in turn were used to estimate the budget evolution for 2022, which as we know, has been quite surpassed by reality.
However, as this last objective, to review and update the 2022 macroeconomic parameters, (such as GDP growth) and to recalculate the closing estimates of public finances, both in terms of income and expenses, the exercise carried out it is quite sparse and insufficient to venture into the likelihood and degree of confidence of the new estimates, so it is difficult to issue a well-documented judgment in this regard.
In fact, CGPE 2022 is written in August 2021, so it contains an “estimate” of how the economy is going to close in that year, and later, based on those closing estimates, the variables for 2022 are “projected”. .
As will be recalled, the real growth estimate for the economy for 2021 was originally 6.3 percent, however, during the last quarter of 2021, the economy stopped its post-Pandemic recovery rate, and finally only grew by 5 percent. , (20.3 percent less) and therefore, this affected all financial variables.
Thus, to recalculate the 2022 estimates, First, it must be evaluated if the 2021 closing predictions were correctsince these absolute values were taken as a “base” to project the values for 2022, and this exercise is not included in the Pre Criteria for 2023.
In terms of Tax Revenues, the final result for 2021 was below the closing estimate, by about $10 billion pesos, which must be adjusted for the re-projection of revenues for 2022.
Subsequently, the new estimate of tax revenues for 2022 is recalculated, also considering each and every one of the variables that affect collection, and that were projected at that time, adjusting their impacts on final collection.
Not only the lower growth of the GDP for 2022 affects the collection, which is estimated with a negative impact of $41,570 million pesos for each point of reduction in real growth, but also inflation, both in general average, and by item of income. product, since the higher inflation in food (12.5 percent) reduces the income available to purchase other products that do pay VAT, and on average, people spend more than 35 percent of their income on food.
On the other hand, the fiscal stimuli for gasoline and diesel are costing an amount of money that was simply not expected, to the extent that not only the collection of federal IEPS is compromised, but even the collection of ISR and VAT they are being affected by the crediting of the additional stimulus, and the duration of these negative impacts on collection is a function of exogenous variables (oil price), which can hardly be predicted.
Thus, in the Pre Criteria document, the SHCP adjusted the tax collection downwards, by $230.3 billion pesos, which looks modest if one considers that only the federal IEPS for gasoline is $288.6 billion pesos.
Even more optimistic is the new estimation of Tax Revenues, excluding the collection of this federal IEPS on gasoline, since, to the letter, the text says:
“Without considering the collection of the IEPS tax on fuels, It is estimated that tax revenues are 27 thousand 159 million pesos higher than what is foreseen in the LIF 2022….. This is explained, in part, by the implementation of tax simplification and administrative improvement measures, approved for this fiscal year”.
Let’s see, if all taxes fall by $230.3 billion pesos but non-oil taxes rise by $27.2 billion pesos, it is concluded that oil taxes fall by $257.5 billion pesos, however, the State IEPS of $29.5 billion pesos is included here, which is NOT subject to stimulus and its collection is not committed, so it must reasonably be fulfilled, and subtracting it, we then have that the FEDERAL IEPS, would be reduced by $228.0 billion pesos, (when it was budgeted at $288.6 billion pesos) a more than modest reduction if it is considered that it is estimated that oil will average 92.9 dlls.
With an assumption of this magnitude for the price of oil, it is practically a fact that the first fiscal stimulus will remain at 100 percent for the remainder of the year, and the collection from March to December would be zero, and if only collected $18 million pesos in January and February, projecting an annual collection of $60.6 million pesos ($288.6 minus $228.0) is not a reasonable projection, except with a lower oil price.
On the other hand, it is also concluded that the additional stimulus would not impact ISR and VAT collection, given that they would even increase their collection, which is not reasonable either.
Considering the estimate of 92.9 dollars per barrel, and that nothing could be collected from federal IEPS for the rest of the year, the effective collection would only be around $20 billion pesos (of 288.6 billion pesos) while an estimate of the cost of the additional stimulus could reach up to $100 billion pesos, (except for deliberate policies to make beneficiaries null and void, by the SAT) and the total cost could be around $368.6 billion pesos, just for these stimuli.
Finally, it is not detected that the impact of lower real GDP growth has been included, since if it is reduced from the estimated 4.1 percent to 2.1 percent, and the sensitivity established by the SHCP itself is applied, there would be a negative in tax collection of $83.1 billion pesos, due to these two points of lower growth.
Now yes, let us proceed to estimate the positive effect of the greater collection efficiency and of the SAT control programs.
In short, the scenario for Tax Revenues looks more than complicated.