Mexico's tax revenues dip 1.4% as GDP slows, heightening fiscal deficit and credit‑rating concerns

Mexico's Treasury reported that total tax collection fell 1.4% year‑on‑year in the January‑May 2026 period, reaching 2.477 trillion pesos, below the 2025 level. The Income Tax (ISR) netted 1.345 trillion pesos, missing the May target by 72 million pesos, while Value‑Added Tax (IVA) collected 703 billion pesos, exceeding the plan by 48 million pesos. The Special Tax on Production and Services (IEPS) rose 6.9%, driven by higher consumption of tobacco and flavored drinks.

Oil‑related revenues dropped 3.2% to 380 billion pesos, attributed to lower production, export volumes and the peso’s appreciation, even as international oil prices rose. Overall public revenues totaled 2.4 trillion pesos, 1.4% below expectations, while government spending rose 2.3% to 3.974 trillion pesos, leaving the primary budget surplus modest.

Analysts warn that the revenue shortfall could widen the fiscal deficit and pressure Mexico’s sovereign credit rating, which already hovers near investment‑grade watch. Separate research highlighted that tax exemptions and deductions (“renuncias recaudatorias”) amounted to 1.58 trillion pesos in 2025—about 4.4% of GDP—exceeding public investment and raising concerns about regressivity and lack of transparency. The informal sector now accounts for over 25% of GDP, and the World Economic Forum’s Energy Transition Index fell 22 places to 59 of 120, reflecting setbacks in renewable‑energy projects.