The Impact of NAFTA and Options for Tax Reform in Mexico

Martinez-Vazquez, Jorge ; Chen, Duanjie

World Bank, Washington, DC

关键词: ACCOUNTING;    AGRICULTURE;    APPAREL;    ARBITRAGE;    BORDER TRADE;   

DOI  :  10.1596/1813-9450-2669
RP-ID  :  WPS2669

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The North American Free Trade Agreement(NAFTA) has had a profound impact on Mexico's economyand institutions. Clearly, no consideration of tax reformcan ignore its role. The thinking about tax reform in Mexicorequires evaluating NAFTA's effect on Mexico'seconomy, including its tax structure, and the effects of itstax system on trade and capital flows between Mexico and itsNAFTA partners, the United States and Canada. The authorsreview the evidence on NAFTA's economic effects,focusing on the changes in foreign trade and foreign directinvestment flows in Mexico and the effects of these changeson Mexico's tax base and ability to raise tax revenues.Using marginal effective tax rate analysis, the authors alsocompare Mexico's tax system with those of Canada andthe United States in terms of the effect on foreign directinvestment. The authors draw two main conclusions from theiranalysis. First, by fueling Mexico's exports andforeign direct investment inflows, NAFTA has altered thecountry's economic structure and hence the industrialdistribution of the tax base. This transformation calls foradapting the tax structure to an economy oriented towardservices and manufacturing exports. And second,Mexico's membership in NAFTA provides no significantreasons for fundamental change in its tax structure. The newwave of tax reform should concentrate on raising revenues,simplifying the tax structure, and increasing the efficiencyand overall equity of the tax system.