The Rise of Female Politicians: A New Era for Mexico's Fiscal Policy?

Two women are the main candidates for the presidency in Mexico in an ever more challenging election campaign where dozens of people involved in politics have been killed in the last few months

by Sededin Dedovic
The Rise of Female Politicians: A New Era for Mexico's Fiscal Policy?
© Manuel Velasquez / Getty Images

Mexico, a country where many women work informal jobs or as domestic workers under extremely poor conditions, is on the path to electing its first female president in the upcoming election on June 2. The leading contenders for this position are two women: former Mexico City mayor Claudia Sheinbaum and former senator Xóchitl Gálvez.

However, it is unclear how the election of either candidate will impact the reality of Mexico's "invisible" female workers, many of whom work in conditions often described as "modern slavery." Domestic workers, who are highly undervalued in Mexican society, actually play a fundamental role, especially now as some women are following men's paths into the professional workforce.

Despite reforms implemented by the current government, these workers remain significantly underpaid, subjected to abuse by employers, long working hours, poor working conditions, and job instability. In addition to domestic work, many women in Mexico, similar to their counterparts in other Latin American countries, engage in informal jobs such as street vending without any labor rights or benefits, much more frequently than men.

Experts sometimes link this to misogyny in local cultures, according to AP. Many women hope that the election of a female president will bring improvements and shift the balance in their favor. Some mention that they will vote for the first time in a long while, as they previously felt that "everyone was the same, no matter who won." The number of professional women has increased over the last fifteen years compared to professional men, but a significant wage gap and barriers to leadership positions still exist.

Nevertheless, an exceptionally large number of women in socially conservative Mexico are taking on leadership and political roles. From 2005 to 2021, the gender gap in government and international entities decreased by over 25%, according to government data.

This progress is attributed to laws enacted over decades to enhance women's political representation. There is a regulation requiring half of the party candidates in elections for the Mexican parliament, Congress, to be women.

Since 2018, women have made up half of the members of Congress, and the number of female governors has also sharply increased. So far, neither of the leading presidential candidates has explicitly addressed the issue of domestic workers, but both have clearly spoken against the increasing violence against women in Mexico and advocate for closing the gender pay gap.

: Presidential candidate Claudia Sheinbaum of Sigamos Haciendo Historia coalition salutes before the last presidential debate ah© Manuel Velasquez / Getty images

Ahead of the election, a debate has emerged in Mexico about ways to reduce the fiscal deficit.

Mexico is exploring how to generate more revenue from banks, a sector dominated by large Spanish and American financial institutions, to close the gap in public finances. According to the Financial Times, officials have discussed a range of measures to increase revenue across all sectors to reduce the fiscal deficit that outgoing President Andrés Manuel López Obrador is expected to leave behind.

Options under discussion include limiting tax breaks and even imposing an extraordinary tax on profits, though such attempts, which require legislative changes, are currently unlikely, according to the FT, citing three sources involved in the talks.

"There is room to collect more taxes from banks," the FT reports from reliable sources familiar with the discussions.

Elimination of tax breaks

The next Mexican government could increase revenue without major legislative changes by limiting some tax breaks.

For example, banks could be required to pay the full amount of taxes instead of deducting their contributions to the deposit insurance system from their tax obligations, which would increase the government's total tax revenue, according to the FT.

Introducing a windfall tax on bank profits, which have reached record levels this year, is one of the options to patch the deficit. If Claudia Sheinbaum, a longtime ally of López Obrador and the frontrunner in the June presidential election, wins, she will face significant pressure to control the country's largest fiscal deficit since the 1980s and steer finances onto a sustainable path.

In an interview with the Financial Times this month, she did not rule out raising taxes but said all changes should wait until her team takes office and studies the situation more closely. Higher interest rates have helped Mexican banks achieve record profits of 273 billion pesos ($16.2 billion) last year, with an average return on equity of 18.5%, according to data from the banking regulator CNBV.

Mexico's banking sector is dominated by foreign entities. Spain's BBVA, the largest bank in the country, generated nearly half of its profits in Mexico last year, while Santander, another Spanish bank, earned 13% of its global revenue there. Other banks with significant Mexican operations include Banorte and Banamex of the American group Citi.