Mexico's Finance Ministry: Gasoline and Diesel Subsidy Carries a 13,000 Million Peso Net Fiscal Cost

Mexico's Finance and Public Credit Ministry (SHCP) reported on July 30 that the tax stimulus applied to the Special Tax on Production and Services (IEPS) for gasoline and diesel carried a net cost of 13,000 million pesos in the first half of the year, against 42,000 million pesos in gross support.

The stimulus has been in place since April to stabilize consumer prices amid rising international crude benchmarks driven by geopolitical tensions in the Middle East. Presenting the quarterly public finance report, Deputy Minister of Revenue Carlos Lerma Cotera explained that the 42,000 million pesos in gross support was partially offset by higher fuel sales volumes, leaving the net revenue foregone as of June 30 at 13,000 million pesos. El Economista reported that the ministry describes the fiscal effect of the stimulus as neutral to date, because rising oil prices boosted Pemex's revenue through the Derecho Petrolero para el Bienestar (Petroleum Royalty for Welfare). The mechanism sustains fuel demand in Mexico, including refined products imported from the U.S. Gulf Coast.

Despite the stimulus, IEPS revenue from fuels grew 3.7% in real annual terms through June, and total collections under the tax reached 353,200 million pesos, up 5.7% year-on-year, though 20,900 million pesos below target, according to El CEO. Energía a Debate noted that gasoline and diesel IEPS alone totaled 219,889.1 million pesos, with a shortfall of 13,021 million pesos against the target, equivalent to 80% of the Economy Ministry's approved budget. Gasoline and diesel demand grew approximately 13% year-on-year during the first half, according to El Economista, which helped keep the net revenue waiver below the gross support figure.

Deputy Minister Lerma indicated that the stimuli will remain in place as long as international volatility persists and to protect purchasing power. The key variable to watch is the crude oil price trajectory: if Middle East tensions sustain prices, the revenue shortfall will widen in the next quarterly report, and the weekly adjustments to the stimulus will signal the intensity of the buffer.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.