OECD Paper Recommends Reforms for Mexico’s Energy Subsidies

OECD at 5014 November 2011: The Organisation for Economic Co-operation and Development (OECD) has published a working paper titled “Fiscal Reform for a Stronger Fairer and Cleaner Mexican Economy,” which claims that Mexico's current energy subsidy structure favors higher-income energy users and hinders the transition to low-carbon sources of energy.

The paper, by Nicola Brandt and Rodrigo Paillacar, highlights the slow growth and income inequality that characterizes Mexico's economy. It stresses that increased spending is needed in infrastructure, education and social policies, and proposes that this money should come primarily via improved efficiency in public spending, especially on energy subsidies. The authors claim that these subsidies are not currently in line with Mexico's ambitious goals to reduce greenhouse gas (GHG) emissions. The paper's conclusions include specific recommendations on tax reforms, cash transfer reform, energy subsidy reform and energy efficiency. [Publication: Fiscal Reform for a Stronger Fairer and Cleaner Mexican Economy]