Fiscal Federalism in Mexico. A Proposal to Strengthen State Public Finance. Nicolás Mandujano Ramos, 1st Ed. Mexico, iiec-unam, 194p., isbn 978-607-02-1407-3

In the book we are presenting, Nicolás Mandujano addresses the current state of fiscal federalism in Mexico. The author focuses on showing how the system of legal and institutional relations prevalent in the Mexican fiscal system has increased financial dependency on federal body income.

In this regard, the book highlights the following:

vertical inter-government fiscal relations have created a tax structure in favor of the most developed federal bodies, where there is greater potential for collection compared to the less developed. They have few possibilities for collecting local taxes for they promote financial dependency on conditional transfers, that is to say, on federal resources and contributions.

Thus the author addresses the problem through the main changes to the National System of Fiscal Coordination in recent years, where the majority of answers to the problem posed are found. Despite this, the aim of this work is not only to reveal the limitations of this system; it goes beyond this in posing one of many solutions to horizontal fiscal balance.

The proposal put forward by Mandujano Ramos establishes the idea of administrative decentralization of Value Added Tax (v.a.t.) at state level, within the framework of administrative coordination and inter-governmental coordination. This would enable local public finances to be strengthened, permitting federal bodies to increase their collection capacity.

To address the issue raised, the author divides the book into four chapters. In the first, he presents a theoretical framework for analyzing the problem of decentralization and fiscal federalism. As well as constructing a theoretical discussion, he addresses the basic functions of the State in the same chapter, commenting finally on the legal and institutional framework of inter-governmental fiscal relations in Mexico.

In the second chapter, he gives a general view of the evolution and performance of federal body revenue, providing a view of the structure of state revenue and federal transfers and an analysis of revenue performance.

In the third chapter sub-national governments’ own revenue is analyzed, particularly in the areas where tributary revenue is integrated such as non-tax revenues and their relationship with revenue from the federation. To address this situation, he proposes that federal bodies are classified in three groups: high, middle and low, according to their capacity for collection.

In the fourth chapter, the author suggests decentralizing and strengthening fiscal federalism in the area of administrative collaboration, focusing on v.a.t. With this it is hoped that federal bodies will boost their collection capacity, thus strengthening Mexican fiscal federalism.

It is worth mentioning that the book not only provides the necessary and indispensable elements to better understand one of the many components that make up the fabric of Mexican fiscal policy. The book goes beyond this in providing a feasible idea for bringing about fiscal decentralization, which has been highly necessary in recent years.

Aderak Quintana
PhD student in Economics -unam