Yesterday, three news regarding the economy showed the serious effects of the economic crisis sparked by the COVID-19 pandemic.
First, it was revealed that tax collection decreased by 15% in contrast with May 2019. Let’s not forget that tax collection is the main source of income for every government. Moreover, the government creates investment plans to launch development plans to benefit society based on annual tax collection reports. Therefore, taxes are essential for the government.
This scenario was expected with a paralyzed economy and low consumption rates. In May, authorities expected to collect MXN 269,615,000 in taxes but they only obtained MXN 221,589,000.
Now, the risk is that tax collection results could become a threat to the correct operation of the government’s administrative structure , which could also worsen the situation since government departments were instructed to freeze 75% of their resources.
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The unemployment rate is another alarming sign. The INEGI reported an increase in employment rates in May but it was not what the government expected. The increase took place in the informal sector after it went from 20.7 million in April to 22.6 million in May; however, this sector lack benefits and healthcare. On the other hand, the formal employment rate reported a decrease, it went from 22.6 million in April to 21 million in May. These numbers suggest that those who lost their jobs in the formal sector joined the informal sector.
Lastly, airline Aeroméxico announced it has started a voluntary financial restructuring process through the U.S. Bankruptcy Law.
A decrease in tax collection, an increase in informal unemployment, and several companies at risk of shutting down are not good signs; however, they were part of the economic crisis scenario. Now that all these situations are taking place, it is time for authorities to launch a solid economic plan.
Today, it’s been two years since Andrés Manuel López Obrador won the presidential election. In 2019, economic dynamism came to a halt and it deepened this year. Where is the country going? When will the government make decisions to undermine the storm? This is no easy task, hopefully the government will act soon.
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