EU4Equity: Strengthening policies and administrations to reduce inequalities in Mexico

Mexico, being the second largest economy in Latin America and the second largest country in terms of population, faces major challenges in terms of social cohesion and the fight against inequality. Disparity in wealth distribution has increased in recent years (INEGI, 2019) and intergenerational class social mobility is minimal. Moreover, poverty rates after the COVID-19 pandemic have reached 43.9% overall, and 8.5% for people living in extreme poverty (ECLAC, 2021). These indicators are accentuated among women, youth, indigenous people and people with disabilities, to which must be added the differences between the north and south or between rural and urban environments. This situation leads to a consequent reduction in social levels of trust in institutions and democracy, and underlines more explicitly the need to re-evaluate the relationships established between citizens and the state, the fiscal system and welfare policies.

In this context, FIIAPP leads the EU4Equity programme, an EU-funded delegated cooperation programme of 5 million euros through the Multiannual Indicative Programme for the Americas and the Caribbean 2021-27, and implemented together with Expertise France (junior partner in this case). This Action aims to contribute to reducing inequalities and increasing social cohesion by promoting fair, inclusive, sustainable and efficient social and labour policies that "leave no one behind". More specifically, the aim is to alleviate the lack of resources and investment in public spending by supporting increased tax collection, the strengthening of public policies and institutions in finance and the improvement and progressiveness of fiscal redistribution.

Thus, FIIAPP aims, under its leadership, to improve the effectiveness of revenue collection, transparency and efficiency in its allocation, strengthen fiscal governance at state and municipal level, as well as promote formalisation and accompanying fiscal modalities for micro and small enterprises.

To this end, it will work hand in hand with (for the moment) more than twenty states that have already committed to work in this direction through their State Tax Model: an initiative led by the State of Guanajuato that seeks to strengthen revenue, formality, transparency, quality of spending and accountability at this level of government.  It will do so by placing social protection policies at the heart of the mandates of the Mexican states' finance ministries and state tax administrations, while also incorporating the gender perspective, labour formalisation, secure digitalisation and the transition towards a green agenda to fight climate change.

In line with these challenges, this Action contributes to the Team Europe Initiative (TEI) on Social Cohesion in Mexico. This project offers an opportunity for the EU to position itself in Mexico as a key player in supporting and accompanying the promotion of an economic and social system based on transparency, equity, governance, progressive digitalisation and access to social protection measures for the most disadvantaged sectors.