Politics: Discontent with 2019 budget grows
Given the absence of any significant tax changes, the revenue side of President López Obrador’s 2019 budget proposals has not attracted much controversy. But the government’s commitment to cap tax rates, expand the primary surplus and pursue costly new social programs led it to make deep cuts elsewhere that have produced considerable political and social blow back even among some of the administration’s most enthusiastic supporters.
They also set the stage for more serious conflicts to come unless officials find a way to reinstate funding such as they have been promising the nation’s public universities and cultural programs. Setting the budget right for those two highly vocal demographics will take a lot less money than managing the problems posed by the decision to radically redesign agricultural subsidy programs beginning with totally defunding Proagro in a move that could have a major impact on the country’s bread basket and eventually disrupt the supply of key crops including maize, wheat and sorghum. The reallocation of social spending could prove equally contentious such as the decision to slash 55% of the Prospera program budget with its 25 million (mostly rural) beneficiaries.
There has also been considerable push back from opposition state governors who are especially alarmed at deep cuts made to the budgetary mechanisms on which they are highly dependent to pay state workers and contractors.
The government’s plans to re-engineer the entire public security system also pose immediate problems by significantly curtailing funds for the Federal Police, the Navy, the Office of the Attorney General, municipal police, and the new Ministry of Security and Citizen Protection. Much more is being earmarked for the Ministry of National Defense, but the bulk of the increase is tied up in physical investments, and not a cent has been set aside for the National Guard that is supposed to assume the central role in public security matters.
The extent to which areas of conflicts have erupted on multiple fronts raises doubts about the sustainability of the new government’s fiscal strategy. Should social protests prove considerable, the new authorities may be forced to reconsider its commitment to freezing taxes.
Now read on...
Register to sample a report