One of the main pillars of government action is public finance, a concept that is related to the availability, management and use that governments make of public resources.

 

The problems of public finance revolves around policies related to the collection of taxes and to the exercise of the public expenditure.

 

 

How does Ethos Laboratory of Public Policies contribute to this topic ? 

 

It makes visible social benefits and costs; thus, facilitating decisions made on revenue and expenditure of government. This action will lead to welfare maximization.

 

We believe that public finances should be exercised under the following criteria: 

 

-Universal access to information society.

-Discussion of public budgets in a transparent manner, with the participation of citizens, civil organizations, institutes and private organizations.

-State and federal governments should be responsible for their income and their respective expenditure.

 

In this sense , Ethos Public Policy Laboratory analyzes four key areas of public finance:

 

Tax Expenditure

 

Tax expenditures or revenue loss are tax benefits that the government uses to achieve certain objectives. Among the most common expenses are tax exemptions, rate reductions, deductions, and administrative facilities.

 

Direct Spending traditionally has been considered as the only tool available to governments for implementing public policies. However, other mechanisms that push political, economic, or social agendas also exist: fiscal spending. Recently, the analysis of fiscal spending was limited and there had been a lack of knowledge about its existence and application.

 

In 2002, Mexico created Tax Expenditure Budget (TEB) for the first time. This budget exhibits current tax treatments, as well as the amount that the government stops collecting due to the existence of the budget. Howeer, Mexico still faces large obstacles in this topic because it does not have the necessary information to carry out a proper assessment of tax expenditures. 

 

At the federal level, identification and quantification of tax expenditures is necessary. However, it is even more relevant at the state level due to the current situation of most states, which is characterized by low tax revenues and high levels of debt, etc.

 

Ethos Laboratory of Public Policies has wide experience in analysis, estimation and evaluation of the tax expenditures; thus, it is the main reference for studies on this subject within Mexico and Latin America. 

  

 

Social Spending

 

Social expense refers to the expenditures or distributions on the part of the government designated finance social basic services as education, health, housing, infrastructure, and others.

 

 

Until recently, the analysis of social spending only considered the amount of resources devoted to different sectors of welfare. Lately, this analysis has been expanded, incorporating aspects of effectiveness, efficiency, and targeting of resources. Likewise, analysis of the redistributive impact of social spending has become relevant. 

 

 

 

Ethos Public Policy Laboratory has developed a compendium of three volumes devoted to the subject in which it proposes and presents policy recommendations that can enhance the efficiency and effectiveness of social spending in Mexico.

 

 In this work, we analyze: 

 

 

• The way in which public spending is allocated to the different areas of development

• Who spends it? How is it spent? For what is it spent?

• The policy of transparency and accountability in the exercise of social spending

• The way social spending impacts income distribution.

 

Tax Policy and efficiency for revenue collection

 

Tax policy deals with:

 

• Outline the directions to obtain the income (mainly tributatries)

• Increase efficieny for revenue collection

• Manage resources

 

The previous has the objective of promoting good performance in the national economy, generate economic growth, control inflation, and decrease unemployment as well as competitiveness of the companies, among other variables. Some of the problems the Mexico faces in terms of fiscal taxes are the tax evasion and thus the insufficient income.

 

Ethos Laboratorio de Políticas Públicas' analysis of this topic strives to contribute to today’s fiscal situation. The objective is to analyze and propose options to achieve a larger tax income as well as to determine the convenience of implementing such adjustments in the fiscal policy design, thus guaranteeing the economic solvency of the public sector and the wealth of the citizens.

 

Accountability and transparency

 

The transparency and the access to the information represents one of the main mechanisms that society counts on to know the performance of authorities and demand governmental accountability

 

Mexico faces such problems with the following characteristics:

 

• Lack of transparency

• Accountability is irregular when implementing public resources

• Restricted access to public information

• Lack of strategies in the program evaluation and government implementation

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If neither foundations nor bases exist in order to execute the transparency and accountability within the government´s system, there will hardly be a democratic progress allowing the country to grow.

 

This topic that is examined in a transversal manner that evaluates all the investigations that are elaborated in Ethos Laboratorio de Políticas Públicas. Contribution towards the progress and enhancement of accountability and transparency should be the main goal of the public sector-for the benefit of civil society, private institutions, and all of society.