Mexico - Politics, government, and taxation
Under its present (1917) constitution, Mexico is a federal republic with 1 Federal District and 31 states. The president, presently Vincente Fox Quesada, elected in 2000, serves for a 6-year term. There is no vice-presi-dent. The president cannot run for reelection to succeed himself or herself. However, the president can run for reelection at a later date. The president selects a cabinet that presently consists of 19 secretaries. The Mexican congress has an upper chamber and lower chamber. The Senate is the upper chamber and consists of 128 senators who are elected to 6-year terms. The Chamber of Deputies is the lower chamber and consists of 500 deputies who are elected to 3-year terms. Although 90 percent of legislation is initiated by the president, it is the responsibility of the legislature to discuss and approve this legislation as well as presidential appointments to high office. The judicial system in Mexico is divided into state and federal components. The Supreme Court of Justice is the highest court in the land. There are 21 magistrates and 5 auxiliary judges on this court. These judges are appointed for life by the president, subject to the approval of the Senate. The judges on the Supreme Court appoint the judges of the lower federal courts. Although the judges on the Supreme Court are independent of the president and are appointed for life, there is a tradition in Mexico that all federal judges tender their resignation at the start of the term of the new president. Local government officials are elected by local elections.
The election of Vincente Fox Quesada, a former Coca-Cola executive, as president of Mexico in July of 2000 made headlines around the world. For the first time in 71 years, the presidency was not held by someone from the Institutional Revolutionary Party or the PRI (Partido Revolucionario Institucional). The PRI is the political party that was formed to embody the principles of the Mexican Revolution. The term "Revolution" is a term that refers to the military overthrow of Mexico's last major military dictator, Porfirio Díaz, in 1910. In 1917, after 7 years of civil war, those who favored the Constitutionalist Revolution led by Venustiano Carranza prevailed in putting together a new constitution for Mexico. The Constitution of 1917 was a remarkably advanced document for its time. It sought to assert not only the political but the economic and social rights of the Mexican people. For example, in addition to establishing a federal government, there are clauses within the Constitution that guarantee free compulsory education, minimum wages, the right of labor to organize and strike, social security, national ownership of resources that are below the ground, and land reform.
In 1929, a Mexican president by the name of Plutarco Elías Calles formed a political party, the National Revolutionary Party to govern in the name of the Revolution. The name of the party was changed in 1946 to the PRI. From 1929 until 1988, Mexico had, in effect, a one-party political system. The system succeeded for at least 2 reasons. First, the party contained political competition by allowing competing interests and factions to organize themselves into "sectors" within the party (the labor and military sector). Second, the PRI in effect provided something for everybody. Those who would otherwise have led rebellions against the establishment had no reason to do so because they could achieve political and economic mobility within the PRI. A political monopoly was maintained by the PRI by matching techniques (such as fraud and bribery) to the appropriate circumstance.
In the 1988 elections, the PRI won the presidency by 50.4 percent of the vote, its lowest winning margin ever. Fully one-third of the seats in the Chamber of Deputies went to opposition parties. In 1997, the PRI lost its majority in the Chamber of Deputies. In 2000, for the first time in Mexican history, the PRI lost the presidential election to an opposition party, the right of center National Action Party (Partido Acción Nacional or PAN). Some have argued that the PRI lost its political monopoly because there are few living Mexicans who remember what the Revolution of 1910 was all about. Others have argued that because the Mexican economy fell upon hard times in the 1980s it became difficult for the PRI to provide something for everyone. More importantly, in the early 1980s the public image of the PRI was badly tarnished with the public disclosure of the corruption and excesses of PRI government officials (for instance, a "gift" of a US$2 million house from the labor unions to President Portillo). After these disclosures, those career politicians who had benefitted from the excesses of the Portillo years found that their political careers were badly derailed. To bolster the image of the PRI, the succeeding president, Miguel de la Madrid Hurtado, appointed a number of technocrats to his cabinet. This tension between the technocrats ("technicos")—people who had professional backgrounds and for the most part had never run for political office—and the career politicians ("politicos") came to a head when de la Madrid nominated a technocrat, Carlos Salinas de Gortari, to succeed him as president. In response to this nomination, arguing that the PRI had departed from its populist roots, 2 PRI officials (Cuauhtemoc Cardenas and Porfirio Muñoz Ledo) split from the party by forming the left of center Party of the Democratic Revolution (Partido de la Revolución Democrática or PRD). Although the PRD fielded Cardenas as its candidate, Salinas subsequently won the presidency by 50.4 percent of the popular vote.
Significantly, the free-market, pro-business policies begun by the de la Madrid administration in 1982 have continued since that time into the Fox administration of 2000. The difference is that Fox's political party, PAN, is a party that is economically and socially conservative. From 1982 until 2000, the policies pursued by PRI presidents were certainly economically conservative. For example, Salinas opened the Mexican economy to market forces by signing the North American Free Trade Agreement (NAFTA) in 1992. This agreement, which went into effect in 1994, decreased trade barriers between Mexico, Canada, and the United States. Additionally, the number of enterprises owned by the government went from 1,155 in 1982 to 215 in 1994, representing a significant decline in government involvement in and regulation of economic activity. It is difficult, however, to characterize the social policies of PRI officials over the last 20 years as necessarily conservative. For example, the response of the Salinas administration to a rebel uprising in Chiapas in 1994 was to negotiate with the rebels rather than confront them.
Over the past 20 years there have also been some significant reforms in the Mexican tax system in an effort to increase government revenues. For example, the government has put in place a value-added tax (VAT) in addition to the income (corporate and personal) and sales taxes that already exist in the country. In addition to the VAT, Mexico has a personal tax system with remarkably low rates. For example, the highest rate of personal income tax is approximately 25 percent. Despite these changes over the past 20 years, Mexico has not succeeded in increasing its tax revenues. The Mexican government's tax revenues when expressed as a percentage of GDP (the tax revenue rate) is approximately 11 percent (that same rate in the United States is approximately 28 percent). This rate is low because individuals and businesses do not comply with the tax laws. Because of low tax revenues, the government has relied on the revenues it receives from the country's oil monopoly (PEMEX). One source has estimated that up to 40 percent of the government's revenue may come from monies it receives from PEMEX.