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					      M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …


I. Introduction

Mexico’s federal tax administration (the Servicio de Administración Tributaria,
or SAT) has been described as having “serious deficiencies.”1 Cumbersome
procedures and a diminished sense of compliance hazard have resulted in the
non-registration of an estimated 1.9 million potential taxpayers in the tax
base.2 As for the 7,557,692 million taxpayers currently registered in the “padrón
activo”3 (see Annex 1), poor intra-agency communication and coordination, the
inefficient deployment of human and information resources, internal
corruption, and an endemic skepticism regarding the lack of clarity and/or
unfairness of Mexican tax collection policies and practices 4 have combined to
make untimely payment,5 fraud, and outright evasion commonplace (see Figure

     Plan Nacional de Desarrollo 2001-2006, at http://pnd.presidencia.gob.mx/pnd/cfm/ListaPdf.cfm (last
visited March 12, 2003) [hereafter “PND”]; OECD, The Tax System in Mexico: A Need for Strengthening the
Revenue-Raising Capacity, at http://www.oecd.org/pdf/M00001000/M00001960.pdf (last visited February
12, 2003) [hereafter “OECD”].
    Mexican taxpayer coverage was estimated to be 83% at the end of 2001. The World Bank, Project
Appraisal Document on a Proposed Loan in the Amount of U.S.$ 52 Million to the United Mexican States in
Support      of      a     Tax        Administration       Institutional      Development        Project,      at
http://www.bancomundial.org.mx/pdf/7127-ME.pdf (last visited February 10, 2003) [hereafter “WB”]. The
SAT seeks to raise the number of taxpayers inscribed in the RFC to 15 million by 2004 and 25 million by
2006. Victor Fuentes, Ponen Lupa al RFC, REFORMA, November 10, 2002, at 1 [hereafter “Lupa”].
    The “padrón activo” encompasses all taxpayers that are obligated to present a declaration.
    Skepticism regarding the fairness of Mexican tax policies stems from the granting of tax preferences to
certain segments of society (agriculture, fisheries, transportation, etc.) and the large quantity of zero-
rated and exempted goods and services in the VAT system. The foregone tax revenue resulting from the
existence of these policies is significant in that agricultural, fishery, and transportation activities alone are
estimated to represent 10% of GDP and 25% of total employment. OECD, supra note 1.
    It has been estimated that 1.85 million of the 5.8 million Mexican taxpayers required to present tax
returns in 2001 failed to comply with this obligation in a timely manner. WB, supra note 2; Lupa, supra
note 2 (reporting that 3.2 million of the 7.1 million taxpayers in Mexico’s padrón activo failed to present
timely and /or accurate declarations in 2002).
    Marcelo Bergman, La Capacidad de Recaudar Impuestos del Gobierno Mexicano: ¿El Tema Previo a la
Reforma Fiscal?, CIDE, 2001, at 2 [hereafter “Bergman”] (noting that almost 50% of Mexico’s potential tax
revenue is lost to evasion, fraud, and other types of fiscal non-compliance). International organizations
indicate that the rate of evasion with respect to Mexico’s IVA is between 37%-60%. OECD, supra note 1;
WB, supra note 2.
R o b e r t M. K o s s i c k

                                    FIGURE 1: COMPLIANCE COEFFICIENT (Source: Bergman, M.)

                          % de Rec.
                                         89   90     91           92           93          94          95   96


                                                          Chile         Argentina          Mexico

Liberal amparo procedures, lax attorney regulation, and the popular perception
of the SAT as a weak and unprepared legal adversary 7 compound these
deficiencies by tying up a significant amount of potential tax revenue 8 in costly
and protracted litigation and further reducing Mexico’s already low rate of
voluntary tax compliance (see Figure 2).

                               FIGURE 2: NET VOLUNTARY COMPLIANCE (Source: Bergman, M.)






                                1990          1991    1992             1993         1994            1995    1996

                                                      Chile            Argentina      Mexico

Mexico has, over the past years, taken many steps with an eye to remedying
these deficiencies, important examples of which include (i) the 1997
transformation of the SAT into a decentralized institution with managerial,
regulatory, and budgetary autonomy, (ii) the overhauling of the SAT’s

    The SAT lost 21,792 of the 35,725 cases it prosecuted for an annual loss rate of 61%. SHCP, Informe
sobre la Situación Económica, las Fianzas Publicas y la Deuda Publica (Cuarto Trimestre de 2002), at
http://www.shcp.gob.mx/docs/info402/info402a.pdf (last visited March 8, 2003) [hereafter “Trimester
    Id. An estimated 118,672,000,000 pesos are currently tied up in pending tax litigation.
      M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

administrative structure, (iii) the introduction of numerous fiscal reform
packages (involving, inter alia, tax rate changes,9 the simplification of
procedures, the elimination of tax havens,10 and the toughening of penalties),
(iv) the conduction of information and promotional campaigns designed to raise
tax payer awareness with respect to fiscal obligations, procedures, and
consequences,11 and (v) the realization of an increased number of high profile
audits12 and raids (see Image 1).13

                                                              IMAGE 1

            Mexico’s elite police force, the GOPES, muster for a tax related mission last year

These efforts have, on balance, done little to strengthen Mexico’s capacity for
securing administrative efficiency, voluntary and timely fiscal compliance, or a
significantly elevated rate of tax revenue collection. According to one study, for
example, the cost of collecting $US100 in tax revenue continues to be
significantly higher in Mexico as compared to other nations (see Figure 3).14

     Bergman, supra note 6, at 7; WB, supra note 2.
       David Armstrong, New Mexican Tax Law Effects Offshore Planning and Time Share Projects, at
http://www.natlaw.com/pubs/spmxtx2.htm (last visited August 15, 2001) (noting way in which Mexican
government has expressly identified certain nations as tax havens).
       Examples of such campaigns include the “Nuevo Esquema de Pagos Electrónicos” and the
“Comprobantes Fiscales.” SHCP, Informe de Labores de la Secretaria de Hacienda y Credito Publico, at
http://www.shcp.gob.mx/index01.html (last visited February 11, 2003) [hereafter “Informe”].
      The SAT conducted 103,965 audits during 2002, 90% of which resulted in observations. Trimester
Informe, supra note 7. But see WB, supra note 2 (noting that only 30% of SAT audits result in observations).
While Mexico’s fiscal presence (i.e., the number of audits conducted per taxpayer) has increased
significantly since 1996, audit effectiveness (i.e., the amount of previously foregone tax revenue collected
for each peso invested in recovery efforts) has slumped from 11.7:1 to 9.8:1. OECD, supra note 1; WB,
supra note 2; Trimester Informe, supra note 7. The SAT plans to increase the number of audits it conducts
in 2003 by 11.35% to 115,804.
      David Vicenteno, Cazan Evazores con Policia de Elite, REFORMA, August 6, 2002, at 1.
      Bergman, supra note 6, at 14.
R o b e r t M. K o s s i c k

                                                      FIGURE 3
                                COST OF COLLECTING $U.S. 100 IN TAX REVENUE

       ARGENTINA                        CHILE                       MEXICO               USA
        (1997)                         (1994)                       (1998)              (1994)
         $1.9                           $0.4                         $1.1                $0.5
Source: Argentina, AFIP; Chile, SII; Mexico, SAT; USA, SII

Other studies note that the 729,429,600,000 pesos in tributary tax revenue
collected by the SAT in 200215 represents no more than an estimated 11%-15% of
Mexico’s GDP (see Annex 1).16 As Figure 4, infra, indicates, this percentage
places Mexico at the bottom of the OECD’s tax revenue to GDP ratio rankings at
the same time it compares unfavorably with the percentages accomplished by
Argentina, Brazil, Chile (18%), and Spain (17%).17

                                                      FIGURE 4
                                  TOTAL TAX REVENUES AS PERCENTAGE OF GDP
                                                   (Source: OECD)

     Trimester Informe, supra note 7. The majority of Mexico’s collected tax revenue derives from the ISR
(approximately 43.78%), IVA (approximately 29.2%), and excise taxes (approximately 22.47).
     OECD, supra note 1; WB, supra note 2; Bergman, supra note 6, at 2. The fact that Mexico’s tax to GDP
ration has remained relatively unchanged (or, indeed, declined) over the course of the past two decades
further underscores the administrative and operational stagnation within the SAT. WB, supra note 2; OECD,
supra note 1 (noting that Mexican tax “revenues as a percent of GDP have fallen in recent years”).
     Bergman, supra note 6, at 2; OECD, supra note 1.
   M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

Finally, the SAT’s continuing administrative and operational difficulties are
reflected in the fact that the total value of Mexico’s “cartera de deudores”
(i.e., portfolio of tax debtors) increased from 253,000,000,000 pesos to
281,381,300,000 pesos during 2002.18
     Deficient tax compliance and administrative practices (i) perpetuate
Mexico’s reliance on the collection of trade tariffs and non-tributary revenue
generated from the extraction of non-dynamic natural resources,19 (ii) deprive
the government of the budgetary revenue required for the upkeep of basic
services, the initiation of beneficial projects, and essential debt servicing
(thereby elevating the risk that the government will resort to printing money to
finance its defecit),20 and (iii) erode the confidence and faith of citizens in
elected officials and public institutions. Absent the resolution of the
aforementioned tax administration deficiencies, it will be difficult for Mexico to
accomplish its inter-related goals of establishing a fundamental respect for the
rule of law, attracting and retaining foreign investors, increasing economic
productivity, reducing poverty, engendering sustainable development, and
assuring the country’s effective insertion into the global economy.
     This paper focuses on the e-SAT, the ICT based e-government application at
the center of the Mexican tax service’s strategy for improving the
administration of the tax system and the collection of tributary revenue. The
first part of this work identifies and analyzes the key milestones of the e-SAT’s
developmental trajectory, taking into consideration the important political
events which have occurred in Mexico between 1997 and 2003. Having put the
development of the e-SAT into political context, the second part of this paper
identifies and analyzes the legal, institutional, and IT infrastructure obstacles
which the Mexican government has encountered in implementing a transaction
capable tax portal. Information regarding the actions that have been taken by
the federal government to overcome the aforementioned obstacles is, to the
extent available, also presented in this section. The third part of the paper
touches on the benefits which have accrued to the Mexican government as a
result of the development and implementation of the e-SAT at the same time it
presents a number of observations regarding the way in which the system will
impact Mexico’s ongoing efforts to eliminate the tax system deficiencies which
have historically operated to impede the country’s sustained development. The
fourth part of the paper extracts and critically assesses the key lessons which

     Trimester Informe, supra note 7.
      The World Bank, Report No. PID11085, March 18, 2002 [hereafter “WBR”] (noting the decline in trade
tariff revenue as a percentage of GDP); WB, supra note 2 (noting that the petroleum sector accounts for an
estimated 15%-25% of the total revenues which enter the Mexican tax system).
     Mexico’s total foreign debt is one of the largest in the world. The awesome payment schedule linked
to this debt requires Mexico to transfer abroad a huge quantity of funds that could otherwise be used for
productive domestic investment. Carlos Marichal, The Vicious Cycles of Mexican Debt, NACLA REP. ON AM.,
November-December 1997, at 25. Crece Deuda Publica en $340 Mil Millones, REFORMA, April 28, 2003, at 1
(noting that Mexico’s total public debt increased by 340 billion pesos in 2002).
R o b e r t M. K o s s i c k

Mexico has learned through its experience with the e-SAT. Being both general
and specific in nature, these lessons are presented for the consultative benefit
of other governmental entities which either intend to or are already in the
process of establishing their own e-government applications and/or programs.
The paper concludes by arguing that the increase in tributary revenue which is
likely to flow from the optimal development of the e-SAT will permit Mexico to
simultaneously modernize its economy and improve its position of global

2. The Development of the e-SAT in Political Context

2.1. 1994-2000: The Zedillo Administration

Inspired by the early successes experienced by Argentina, Brazil, Chile, and
other Latin nations in terms of using ICT for the purpose of improving the
delivery of government services (particularly in the context of taxes and
procurement) and transforming the fundamental nature of the citizen-
government relationship,22 the Zedillo administration (1994-2000), as part of its
OECD based program of regulatory and administrative reform, began the process
of moving government information and services online. It is important to note
that the concept of a comprehensive program of e-government had yet to
emerge. In this sense, the inception of the aforementioned migration of
government information and services can be more accurately understood as
consisting of an uncoordinated series of ad hoc initiatives undertaken by the
various dependencies and entities of Mexico’s federal public administration.

      Mexico was ranked 43rd out of a total field of 75 nations in the World Economic Forum’s recent
“Competitiveness Report.” Klaus Schwab & Jeffrey D. Sachs, The Latin American Competitiveness Report
2001-2002, at http://www.weforum.org (last visited December 8, 2001) (Mexico’s “competitiveness”
ranking was 43 in a total field of 75 nations). In a similar vein, Mexico was ranked 41 (out of a sample of 49
nations) in the IMD’s 2002 “Global Competitiveness Report.” This ranking represents an 8 place drop
relative to 2000 and puts Mexico behind Chile (20) and Brazil (35). IMD, IMD World Competitiveness
Scorecard 2002, at http://www01.imd.ch/documents/wcy/content/pastranking.pdf (last visited December
20, 2002).
     Information regarding the online tax services available in other Latin American nations is available at
http://www.afip.gov.ar       (Argentina),    http://www.receita.fazenda.gov.br/novapag/apresentacao.htm
(Brazil), and http://www.sii.cl (Chile). The introduction of online tax filing has resulted in the submission
of record numbers of corporate and individual tax returns in Brazil and Chile. Juliana Viegas, et al., Brazil:
Record       Number       of       Income      Tax       Returns      Filed     Through       Internet,     at
http://www.bmck.com/elaw/getarchive.asp?action+Iso (last visited May 5, 2000); Lisecott Kana &
Fernando            Barraza,           Taxing           Time           for         E-Government,            at
http://www.oecdobserver.org/news/fullstory.php/aid/424.html (last visited August 28, 2001).
   M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

    While the SAT did not make much progress in this regard during the first half
of the Zedillo administration (likely due to the devaluation of 1995 and its
pending 1997 separation from the SHCP), the newly autonomous tax
administration had, by 1998, succeeded in establishing an interactive web
page23 that (i) contained basic information pertaining to Mexico’s tax laws and
procedures and (ii) permitted obligated taxpayers to electronically file their
annual declarations.24 These capabilities were supplemented by the introduction
of online tax payments (via an electronic funds transfer from the portal of a
taxpayer’s bank to the federal treasury).
    The primary beneficiaries of this new system were the large corporations
obligated to use same pursuant to the Onceava Resolución of February 1998.
Although they were given the option under this law, most smaller and medium
sized corporate entities declined to engage in electronic tax transactions. This
outcome probably reflects the reduced rate of technology adoption (i.e.,
hardware, Internet, online banking services, etc.) that pertained to these
groups at that time.
    Even though the introduction of ICT based e-government applications
coincided perfectly with the program of administrative and operational
modernization and simplification that was carried out by the SAT between 1997
and 2000, the Zedillo administration – by then nearing the end of its six year
term and wary of investing political and/or financial capital in systems the
benefits of which had a real chance of accruing to a political party other than
the PRI – did not take further action with respect to the development or
integration of the SAT’s online services.

2.2        2000-2003: The Fox Administration

Mexico’s drive towards the online delivery of tax services acquired new
momentum with the historic alteration of executive power that occurred in
2000. Having campaigned, in part, on the promise of using ICT to improve the
quality of government services, reduce corruption, strengthen the tax
administration system, and increase revenue,25 the Fox administration
prioritized the further development of the e-SAT within the overall framework
of the newly launched Sistema Nacional e-México.26 This vision is reflected in

       See http://www.sat.gob.mx (last visited March 14, 2003).
     See “Onceava Resolución de Modificaciones a la Resolución Miscelánea Fiscal para 1997 y sus Anexos 1
y 14,” D.O., 13 de febrero de 1998 (obligating certain corporate entities to present tax declarations and
payments via electronic means). These declarations are now prepared pursuant to the DEM program. It is
important to note that this online presentation service continues to be available to corporate taxpayers
only. Individuals must still present paper based annual declarations.
     PND, supra note 1.
     See http://www.e-mexico.gob.mx (last visited March 2, 2003).
R o b e r t M. K o s s i c k

the contents of the SAT’s current Plan Estratégico27 and Proyecto de Desarrollo
Institucional para la Administración Tributaria,28 key objectives of which call
for increasing the number of individuals and entities inscribed in the padrón
activo and enhancing the tax administration’s operational efficiency through the
development and use of integrated and secure information systems. Consistent
with this mandate, the SAT expanded the nucleus of online tax services
introduced by the Zedillo administration so as to provide for the electronic
realization of the following tax transactions: (i) obtainment of a personal form
of electronic identification (the CIEC),29 (ii) inscription in the RFC, 30 (iii)
submission of a declaración informativa,31 (iv) the presentation of a dictamen,32
(v) the presentation of a declaración estadística,33 (vi) the modification of
taxpayer data (i.e., the declaración de corrección de datos),34 (vii) the
realization of an inquiry into the status of a taxpayer account (for example,
with respect to prior payments, declarations, legal or administrative filings,
etc.),35 and (viii) the scheduling of an appointment with a SAT tax counselor. 36
    Having spent the better part of 2000 and 2001 confirming the correct and
reliable functioning of the aforementioned online processes (i.e., in relation to
their traditional, paper based equivalents), the SAT promulgated a new
regulation, effective August 2002, requiring the electronic submission of most

         SAT,     Plan    Estratégico     2002      del    Servicio    de    Administración    Tributaria,    at
http://www.sat.gob.mx/plan_estrategico/pesat.htm (last visited February 14, 2003).
          SAT,      Proyecto      de      Desarrollo       para     la     Administración     Tributaria,     at
http://www.sat.gob.mx/banco_mundial/consulta_componentes.htm (last visited March 2, 2003).
      This process entails the generation of a confidential yet low security form of electronic identification.
While CIECs are not personally bound, taxpayers already have their CURP and RFC numbers. Taxpayers are
also     able    to    generate      CIECs     in    person    at    most    SAT    attention    centers.   See
http://www.acieci.sat.gob.mx/acieci.asp (last visited March 7, 2003).
      This service is currently restricted to companies that are in the process of being formed. Mexico’s
notary publics are, in this regard, able to obtain a corporate tax ID for new entities via the Internet. See
http://www.sat.gob.mx/AGJI97/notario02/notar_02.html (last visited March 8, 2003). Individuals must,
alternatively, still physically register for their tax ID at the SAT attention center which corresponds to their
      Taxpayers submitting a declaración informativa must first download or otherwise obtain the DIMM
program. See Declaraciones Electrónicas, at http://www.sat.gob.mx/decelec/cinfodec.htm (last visited
March 2, 2003).
      Dictámenes may be prepared and submitted by properly accredited Registered Public Accountants
pursuant to the SIPRED program (available through either a SAT assistance center or as a download over
the Internet). See Dictámenes Fiscales, at http://www.sat.gob.mx/dictamenes.dictamenes.htm (last
visited March 2, 2003).
      See Declaración Estadística, at http://www.avisoencero.sat.gob.mx/avisointernet/avisoencero.asp
(last visited March 5, 2003).
       See Corrección de Datos, at http://www.correcion.sat.gob.mx/CorrecionInternet/correcciones.asp
(last visited March 5, 2003).
       This information is posted by 6:00 P.M. on the day of the transaction. See Consulta, at
http://www.consulta.sat.gob.mx/consultatransaccion/ (last visited March 5, 2003); Aviso al
Contribuyente, at http://www.sat.gob.mx/Notificaciones/Default.asp (last visited March 3, 2003).
      See Citas, at http://www.sat.gob.mx/citas_internet/index_cint.html (last visited March 9, 2002).
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individual and corporate taxpayer declarations (through the SAT’s portal) and
payments (through the portal of the taxpayer’s bank or, in the event that a
taxpayer does not have a bank account, via a tarjeta tributaria).37 The effect of
this most recent development has been to greatly reduce the amount of
paperwork previously managed by Mexico’s tax registry, declaration, and
collection units.

2.3      The e-SAT Program Going Forward

It must be recognized that the e-SAT initiative does not constitute one discrete
project but, rather, a continuously evolving, administration transcending series
of “works in process.” Measured from its 1995 starting point, the initiative has
led to the development and implementation of tax administration efficiency
enhancing features and services. With this background in mind, it is noted that
the SAT is currently working to develop and implement online systems for the
receipt and processing of credit card payments and the realization of tax

3. Implementation Challenges

Implementing new, ICT based systems, procedures, and practices is no small
task. This is all the more true in the context of an environment characterized by
an elevated possibility of political discontinuity, a rapid rate of technological
obsolescence, near constant budgetary shortcomings, a highly organized federal
bureaucracy with a deeply engrained sense of administrative entitlement, an
excessively formalistic legal culture, and evolving IT and telecommunications
infrastructures. The following sections identify the primary institutional,
administrative, legal and technological challenges that have been encountered
by the SAT in conjunction with the development and implementation of online
tax services and, where appropriate, provide insight into the ways in which
these issues have been resolved.

3.1      Scope of Vision

      See “Resolución Miscelánea Fiscal para 2002 y sus Anexos 1, 4 y 14,” D.O., 30 de mayo de 2002
[hereafter “RMF0502”]; The SAT does not assess any charge in connection with online declarations and
payments. Banks may, however, charge a slight service fee to offset the cost of electronically facilitating a
client’s tax transactions.
R o b e r t M. K o s s i c k

The process of designing, implementing, and maintaining an e-government
program is an expensive and complex undertaking. To best assure an adequate
return on investment (as measured by the program’s widespread adoption,
effective functioning, and positive impact), it is critical that governments have
a plan that takes into account both short term exigencies and long term
scalability and performance considerations. Governments that fail in this regard
run the risk of winding up with inadequate system designs and – in extreme
cases – unfinished projects.
    In contrast to the Zedillo administration, the government of President Fox
has expressly emphasized the necessity of (i) strategic IT and e-government
planning and (ii) committed and capable IT leadership. 38 Notwithstanding the
fact that the e-government plan resulting from this emphasis does provide a
basic sense of short term guidance, the intrinsic nature of Mexico’s political
system – based as it is on non-extendable six year terms and, as of the late
1990’s, the real prospect of political competition – complicates meaningful long
term planning. A prime example of this myopic perspective involves the way in
which the SAT’s internal strategic operating plan (i.e., its “plan de trabajo”)
runs not from 2000-2006 but, rather, from 2000-2004. The reason for this
accelerated timeframe reflects the current administration’s desire to produce
tangible results as quickly as possible, lest the political gains to be derived from
its investment in e-government accrue to a potentially victorious opposition
party in 2006.
    This situation is partially remedied by the identification of generalized long
range planning objectives, an example of which includes the Fox
administration’s stated goal of connecting 98% of the population to the Internet
by 2025.39 While such pronouncements are certainly suggestive of the existence
of a long term strategy, the fact that there is, in reality, little in the way of a
concrete and detailed plan for the post-2006 period renders such statements
aspirational at best. This latter point is well illustrated by the way that a top e-
México official recently defined the “long term” as being “2005-2006.”40 It is,
finally, relevant to note that in spite of the increased emphasis that is being
placed on strategic IT planning, extensive interviews with SAT officials did not

      Neither the Sistema Nacional e-México nor its constituent subsystems suffer from a lack of committed
and capable leadership. At the level of the Sistema Nacional e-México, President Fox has made this project
a foundational part of his administration. Consistent with this observation, President Fox has created an
entire executive branch office dedicated, inter alia, to using ICT to improve government (the OPIG which
is run, in part, by Abraham Sotelo), in addition to requiring the establishment of a new e-government sub-
secretariat position within the SCT (occupied by Julio Cesar Margain). The current leader of the SAT
(Francisco Gil) is, to the extent he has previously served as both the Secretary of the SHCP and the
President of Avantel, similarly committed to and interested in the success of the e-SAT subsystem. Like
President Fox, SAT President Gil has assembled a highly qualified IT team, many members of which were
drawn from the private sector (Ruben Aguirre, Porfirio Sanchez, Jose Ernesto Vasquez, etc.).
      Angeles Avila, e-México Project Overview: Telecom Trends Mexico 2003, August 12, 2002, at 1.
      OPIG, Proyecto Gobierno Electrónico, at http://www.innova.presidencia.gob.mx/index2.shtml (last
visited March 13, 2003) [hereafter “Proyecto”].
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yield any practical insights into how the Servicio will actually accomplish inter-
administration planning continuity.

3.2      Coordination

A problem similar to that identified in the preceding section exists with respect
to the coordination of Mexico’s e-government program.
    On one level, the Sistema Nacional e-México appears to be a centrally
coordinated program characterized by a high degree of inter-secretarial
cooperation. The Presidencia based office of Innovación Gubernamental,41
together with the Consejo del Sistema Nacional e-México,42 the Secretaria de
Comunicaciones y Transportes,43 and the private sector consulting group e-
Strategia (http://www.e-strategia.com/), spearhead the strategic planning
process, defining, within the overall framework of the objectives set forth in
the PND and the Agenda de Buen Gobierno, relevant connectivity, content, and
systems actions. The realization of these actions is carried out by a network of
strategic partners44 which is, in turn, organized into a series of interactive yet
autonomous working groups.45 Completing the picture, designated units within
the SAT (for example, the Administración General de Tecnología de Información
and the Administración General de Innovación y Calidad) have the responsibility
of making these objectives operational. A graphic depiction of the Sistema
Nacional e-México’s organizational structure is presented in Figure 5, infra.

     See http://www.innova.presidencia.gob.mx (last visited March 11, 2003).
      This council is composed of the secretaries of all major cabinet level dependencies plus
representatives of the Presidential Office for Governmental Innovation.
     See http://www.sct.gob.mx (last visited March 14, 2003).
     The members of the “Red de Socios Estratégicos” are drawn from a broad range of backgrounds,
including the government (60+ agencies), the private sector (Alestra, Axtel, Unefon, Iusacell, Telcel,
Avantel, Bestel, Telmex, etc.), the international community, and academia (the ITESM, Berkeley, etc.).
     Examples of the 420(+) working groups that have been set up within the framework of the Sistema
Nacional e-México’s connectivity, content, and systems action lines include (i) government network and
R o b e r t M. K o s s i c k

                                     FIGURE 5: OVERVIEW OF THE E-MÉXICO PROGRAM
                                                                                 Council for the
                                                                                Sistema Nacional

                                                     Technical Secretary
                                                 Oficina de la Presidencia de
                                                      Políticas Públicas
                                                                                                        Legal Framework
                                                                                                         Working Group
                                                Operational Coordinator
                                             Secretaria de Comunicaciones y
                                                   Transportes (SCT)

                                       Content                                                            Connectivity                   Systems

                                                                         E-Science,      Nation Wide                                           National Data
             E-Learning   E-Health    E-Economy       E-Government     Technology &         Digital          CCDs         NAP                   Integration
                                                                          Industry       Connectivity                                              Center

                                                         & Filing

                                     E-SAT       Tramitanet   Declaranet   Compranet

In spite of the creation of the foregoing organizational structure, the de facto
coordination reality of Mexico’s e-government program is quite distinct. The
vertical linkages between Presidencia and the secretariats (and other entities,
including the SAT) are, at best, weak. While a series of bilateral “convenios”
have been entered into between Presidencia and the other secretariats with
regards to the Gobierno Digital aspects of the “Sistema de Metas
Presidenciales,”46 the precatory nature of these agreements diminishes their
potential utility for driving and/or benchmarking progress. 47 Equally troubling
from a coordination point of view is the fact that the dependencies and entities
within the federal government have yet to designate CIOs. Improvement on this
point is expected, however, insofar as a group of public servants has recently
been selected to undertake a CIO training program jointly developed by
Presidencia, the INFOTEC, and Berkeley. Finally, in an outcome that bodes
poorly for the future integration and interoperability of the subsystems
contained within the Sistema Nacional e-México, SAT officials relate that the e-
government program’s leadership has yet to disseminate a common and
obligatory set of application, database, and systems standards or
requirements.48 This outcome comes as a surprise given (i) the operation of the

intranet, (ii) security, (iii) interoperability and standards, (iv) citizen portal, (v) savings and benefits, and
(vi) e-agency).
     Informe, supra note 11.
     Bilateral executive-secretariat directives have also been issued with respect to the development of
Mexico’s e-government program. Contrary to the administration’s stated policy of transparency, however,
information regarding these presumably obligatory instruments has not been made widely available.
     This task would, presumably, fall to the working groups on “government network and intranet” and
“interoperability and standards.”
   M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

SAETI (the Sistema Administrativa Estratégica de Tecnología de Información)
program49 and (ii) the administration’s previously announced goal of establishing
a government wide intranet, along with IT system consolidation and
interoperability, by the end of 2002.50 When asked about this disconnect
between projected progress and reality, e-México officials acknowledge that
they have not advanced as quickly as originally anticipated and assert that they
expect to promulgate mandatory guidelines (especially with respect to the
purchase or lease of hardware and software) by the end of 2003.51
    Based on the foregoing, it is clear that the relatively low level of guidance
and impact attributable to Mexico’s e-government coordination apparatus has
effectively resulted in a decentralized approach to the development and
implementation of the different subsystems contained within the Sistema
Nacional e-México. This situation of de facto decentralized coordination is, to
the extent it grants the SAT flexibility to tailor the development of the e-SAT to
the Servicio’s unique administrative and operational characteristics and reality,
not necessarily an undesirable outcome. Care must be exercised, however, to
ensure that the flexibility associated with this approach is not so excessive as to
preclude the e-SAT’s subsequent integration and interoperability with the 19
federal secretariats, 267 public entities, 110 portals, 128 high impact data
systems, 2.5 million public servants, and 120 million citizens which collectively
make up the Sistema Nacional e-México.

3.3        Commitment of Resources

The successful planning, development, and implementation of e-government
programs necessarily requires the existence of a reliable source of financing.
Funding for the e-SAT program has, to date, come principally from the SAT’s
budget. While the Servicio has the institutional autonomy to determine where
its spending priorities lie, the relatively small size of its annual budget has
served as a limitation with respect to the realization of projects such as the e-
SAT (see Annex 2).
    In overcoming the barrier posed by a shortage of financial resources to the
maximum development of the e-SAT program, the SAT has two alternative
sources of funding to which it has been able to turn. The first is the inter-

       The SAETI is a government wide IT planning system.
     Proyecto, supra note 40. This outcome is additionally surprising when considered in light of the Fox
administration’s stated goal of establishing an e-México data integration center by the end of 2002.
     There has, in this connection, been considerable discussion regarding the possibility of improving data
interchange through the use of heterogeneous platforms and open standard applications (particularly XML).
Given the still evolving nature of this issue, the SAT should exercise care in ensuring that the applications
generated by its staff of in-house staff programmers do not pose subsequent interoperability and/or
integration problems.
R o b e r t M. K o s s i c k

secretarial fidecomiso set up under the Sistema Nacional e-México.52 As a
contributor to this trust, the SAT has the right to propose projects which, if
approved, will be financed with fund resources. The second alternative source
of funding involves outside creditors. Pursuant to this alternative, the SAT has
arranged a $U.S.52 million technical assistance loan from the World Bank, a
large part of which will be put towards the further development of the e-SAT.53
This loan is significant in that it will help assure the availability of the funds
required for the continued development of the e-SAT, irrespective of whatever
budgetary pressures may befall Mexico in the months and years to come.
Finally, in contrast to the Sistema Nacional e-México’s largely tax incentive
driven “private sector pays” approach to funding,54 the development of the e-
SAT has depended financially on neither donations (or other forms of private
sector participation) nor the commercialization of its databases.

3.4        Establishing an Adequate Legal Framework

Mexico acquired, as part of its civil law heritage, an acute sense of legal
formalism. The result of this inheritance is that, absent the existence of a code,
law, or regulation directly addressed to a particular subject matter – say, for
example, the realization of online tax transactions – many citizens will be
reluctant to take advantage of the service or realize the activity associated with
same. In a related vein – and, notwithstanding the increasingly independent and
precedent minded nature of Mexico’s administrative and judicial authorities – it
is unlikely that a Mexican judge will pass on any issue that amounts to a case of
first impression without prior legislative guidance.
     Cognizant of the limitation imposed by Mexico’s legal heritage, the SAT has
had to undertake an extensive review and reform of all laws and regulations
that have a potential bearing on the successful implementation of the e-SAT.
This process has centered around three basic issues: electronic signatures and
data messages, data archiving, and official electronic receipts.
     Legal certainty with respect to electronic signatures was established through
the introduction of a package of e-commerce oriented legislative reforms in

     The fidecomiso was established at the outset of the Fox administration and has approximately U.S.$40
million in funds for 2003.
     WB, supra note 2.
     Under this approach, 10% of the capital required for the realization of the e-México program will come
from the federal government and 90% will come form private sector entities. Grant Smith, Building E-
Governments             in           Latin           America,             at           http://www.connect-
world.com/past_issues/latin_am.../g_smith_YANKEE_GROUP_2001.asp (last visited August 16, 2002). As
the SCT’s 2002 Programa de Trabajo notes in this connection, the government seeks to “ensure that the
Sistema Nacional e-México does not represent an onerous burden to the State and that it be socially
profitable.” SCT, Programa de Trabajo 2002, at http://www.sct.gob.mx (last visited November 28, 2002).
   M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

2000.55 These reforms explicitly set forth the circumstances under which the use
of an electronic signature or data message would satisfy the requirement for a
“signature” or “writing.” The effectiveness of these general reforms was
reinforced at the level of the SAT as subsequent fiscal legislation established
that the electronically generated “means of identification” used for tax
transactions represented the legal equivalent – both in terms of effect and
probative value – of a manual, paper based signature.56
    The second basic legal issue related to the implementation of the e-SAT
involves data archiving. Between 1995 and 2002 the federal government
declined to provide guidance with respect to the storage of the electronically
generated business records that (i) supplement declaration filings and (ii) form
the basis of tax audits. This situation was remedied by the recent enactment of
NOM 151, the content of which directly addresses data message archiving
standards and requirements.57
    The final legal issue bearing on the successful implementation of the e-SAT
program involves the issuance of tax transaction receipts, as contemplated by
article 29 of the Código Fiscal de la Federación. Mexican law, both as written
and interpreted, theoretically provides juridical certainty on this point.
According to the fiscal reforms of May and December of 2002, the digitally
“stamped” receipt that is automatically generated upon the realization of an
electronic declaration (submitted through the SAT’s portal) or payment (made
through either the portal of an authorized bank or via a tarjeta tributaria)58
demonstrates taxpayer compliance.59 The legal sufficiency of the digitally
stamped tax transaction receipt is bolstered by two tesis aisladas.60
    Notwithstanding the existence of the aforementioned legislative and
precedential foundations, litigants in Mexican tax courts continue to complain

     “Decreto por El que Se Reforman y Adicionan Diversas Disposiciones del Código Civil para el Distrito
Federal en Materia Común y para Toda la Republica en Materia Federal, del Código Federal de
Procedimientos Civiles, del Código de Comercio, y de la Ley Federal de Protección al Consumidor,” D.O.,
29 de mayo de 2000.
     RMF0502, supra note 37; “Décima Segunda Resolución de Modificaciones a la Resolución Miscelánea
Fiscal para 2002 y Anexos 4, 5, 7, 8, 11, 15 y 18,” D.O., 30 de diciembre de 2002 [hereafter “RMF1202”].
     “Norma Oficial Mexicana NOM 151-SCFI-2002, Practicas Comerciales – Requisitos que Deben Observarse
para la Conservación de Mensajes de Datos,” D.O., 4 de junio de 2002. The archiving provisions of NOM 151
only apply to data messages used in acts of commerce.
      The 147-150 alphanumeric characters contained in a digitally stamped receipt note both the
taxpayer’s RFC and the issuing financial institution.
     RMF0502, supra note 37; RMF1202, supra note 56.
     See “Declaraciones Fiscales Presentadas por Medios Electrónicos (Vía Internet). El Primer Acto de
Aplicación se Acredita con Acuse de Recepción que Contenga las Datos Referentes a la Hora, Fecha, Folio,
y Tipo de Operación, Transmitido por la Autoridad Correspondiente,” 16 S.J.F. 1351 (9a época 2002);
“Consolidación Fiscal. La Constancia del Pago Provisional del Impuesto Sobre la Renta en Relación con el
Resultado de los Estados Consolidados de las Sociedades Controladoras, Obtenida en la Red de Internet,
Acredita el Acto de Aplicación de los Artículos 57-E, 57-K, 57-N y 57-Ñ de la Ley de la Materia, Vigentes a
Partir de Enero de Mil Novecientos Noventa y Nueve, para Efectos del juicio de Amparo,” 17 S.J.F. 20 (9ª
época 2001). These two tesis constitute persuasive but not binding authority for Mexican courts.
R o b e r t M. K o s s i c k

of the judiciary’s unwillingness to grant digitally stamped tax receipts a legal
value other than that of “copia simple.” As one tax litigator with the Mexico
City office of Deloite & Touche recently noted, “online tax payments lack
probative value.”61 This outcome is problematic in two ways. First, to the
extent that taxpayers are required to physically return to the SAT and obtain
certified copies of the receipts underlying their tax transactions, it is
inefficient. Second, the judicial power’s evident lack of familiarity with
contemporary identification and authentication practices underscores the poor
state of its preparedness for confronting the types of legal and technological
issues that are likely to arise out of the global knowledge economy.
    There are several actions that Mexico can take, going forward, to remedy
this situation. The first involves the provision of basic IT training to judges and
other relevant court officials (i.e., secretarios and actuarios). The objective of
this action would be to provide Mexico’s judicial officials with a functional
familiarity of the basic legal and technical issues pertaining to electronic
signatures, online identity authentication, public key infrastructures, certifying
authorities, and data message integrity. Another positive development would be
the firming up of the aforementioned tesis into a jurisprudencia with a binding,
stare decisis quality. Last, juridical certainty with respect to tax transaction
receipts would be enhanced by the approval and implementation of the recently
introduced initiative addressing, inter alia, the comprobante fiscal.62

3.5        Impact of e-SAT on Staffing

The innovation and deployment of technology commonly operates to make
previously established occupational tasks and procedures obsolete at the same
time it creates a demand for new skills and competencies. Mexico’s recent
experience with the development and implementation of an ICT based program
of e-government has not proven to be an exception to this general rule of
technology advancement
    Since the launching of the e-SAT program in the late 1990’s, many low and
high level tax administration employees have been faced with the prospect of
reassignment or, where that was not possible, termination. Tax administration
occupational tasks that have been particularly hard hit by the trend towards the
disintermediation and online delivery of tax services include documentation

     Alicia Diaz, Amagan Leyes Ambiguas a Causantes Cumplidos, REFORMA, March 31, 2003, at 1A.
     See “Decreto por el que se Reforma, Adiciona y Deroga Diversas Disposiciones del Código Fiscal de la
Federación,” Gaceta Parlamentaria, 14 de diciembre de 2002, at http://gaceta.diputados.gob.mx/ (last
visited March 6, 2003). SAT officials expect this law to come into effect by April 2003.
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intake (for example, certain registry inscriptions, declarations, dictámenes, and
modifications), payment collection and verification, and archiving functions. 63
    Focusing, alternatively, on the way in which technology has positively
impacted staffing, the development and implementation of the e-SAT has
increased the Servicio’s need for computer programmers and software
designers,64 portal and database managers (the latter being responsible for the
digitalization, migration, and warehousing of data), systems engineers and
testers, and auditors that are capable of working with both computerized and
paper based accounting and financial data. Many of the SAT’s needs in this
connection have been satisfied by the quality oriented recruitment of new
employees. In other cases, however, the SAT has demonstrated a strong
willingness to contract the services of external consultants. This disposition has
been especially evident with regard to issues involving online auditing, legal
and/or administrative reform, and IT (security, training, etc.). Consistent with
this recognition of the fact that government agencies should not try to
accomplish tasks outside their areas of core competence, the selection of
project consultants is accomplished through a competitive, largely Internet
based bidding process.65
    According to SAT officials, the foregoing dynamic has given rise to the
elimination of approximately 15,000 jobs. The severity of this loss has been
partially offset by the addition of approximately 5,000 new jobs. The resulting
net reduction of approximately 10,000 positions is consistent with the SAT’s
current objective of harnessing technology for the purpose of providing more
consistent and effective public service with a smaller yet better trained and
qualified staff.
    Not surprisingly, the aforementioned process has engendered a great deal of
resentment amongst SAT employees, many of which have come to think that the
primary function of the Servicio is to provide them with a job, as opposed to
making the administration of government more effective. Backed by a strong
base of politically affiliated unions, these workers have manifested their job
security concerns by resisting – either indirectly or overtly – the implementation
of programs geared toward the online delivery of tax services.66

     Recaudara SAT por la Red, REFORMA, July 18, 2002 (noting ICT driven obsolescence of certain SAT
functions and positions).
     The SAT currently employs approximately 200 in-house computer programmers.
     Terms of reference, goods and service specifications, and other SAT specific procurement information
is available online at http://www.sat.gob.mx/Informa_el_SAT/Licitaciones.html. Outsourcing is being
looked to as a means of facilitating the harmonization of IT platforms, avoiding technological
obsolescence, and circumventing irregular licensing practices. Informe, supra note 11.
     According to SAT officials, resistance to the introduction and adoption of ICT based administrative and
operational practices has been demonstrated through the unwillingness of employees to retrain or
otherwise cooperate in the roll out and use of new online fiscal services. See also Jorge Arredondo Pineda,
La Tecnología en el Gobierno Enfrenta Resistencia, EL UNIVERSAL, February 10, 2003, at 1 (noting that
resistance to e-government applications in Mexico is most likely to occur when vested pockets of power are
R o b e r t M. K o s s i c k

    The SAT has pursued several courses of action in its attempts to overcome
the obstacle posed by this situation of employee resistance to the continued
development of the e-SAT. For example, the SAT has increased the internal
dissemination of information (in the form of directives, manuals, etc.) regarding
the basic objectives and benefits of the e-SAT, thereby preemptively helping to
mitigate against the damage caused to employee morale by inaccurate
information and/or uninformed rumors. The tax administration has, moreover,
made a genuine effort to use the SAT’s temporal and financial resources to
retrain – with an eye to retaining – at risk employees. It is, in this connection,
noted that the SAT spent at least 3,496,740 pesos during 2002 on a variety of
online or live professional services, workshops, and self-study programs.67
Examples of SAT employees that have been successfully retained include those
individuals attached to taxpayer assistance centers (retrained to provide tax,
general Internet advice, and identification binding services) and auditors
(retrained to understand the nuances of both traditional and online accounting
and reporting practices).
    The one anti-employee resistance strategy the SAT has not, to date,
adopted involves the offering of performance incentives. The introduction of
such a system is, according to SAT officials, currently under consideration. The
pending publication of the recently introduced Ley del Servicio de Carrera en la
Administración Publica Federal will, to the extent that it contemplates the
creation of a point based system of performance based incentives for
advancement, likely accelerate this process.

3.6        Overcoming the Digital Divide

Another fundamental issue Mexico has had to confront in conjunction with the
implementation of e-government applications is its low level of Internet access.
Reflecting the country’s generally weak telecommunications infrastructure, de
minimis PC penetration rate,68 nominal per capita GDP, and the tight state of

     SAT, El SAT Informa, at http://www.sat.gob.mx/informa_el_sat/contratos.html (last visited March 13,
2003) [hereafter “El SAT Informa”] (presenting detailed summary of all contracts for the purchase of goods
and services executed by the SAT during 2002). It is noted that this amount represents but a small part of
the 246,161,100 pesos which the SAT allocated in 2002 for employee training. Looking forward, the World
Bank and government of Mexico’s Tax Administration and Institutional Development Project has allocated
U.S.$1.16 million for further IT related employee transition training. The e-government diplomado which
the government of Mexico plans to offer in conjunction with the World Bank in 2003 will, on a more
general level, constitute another important source of training.
     There are only an estimated 6.87 computers for every 100 citizens in Mexico. CIDE, Telecom-Data, at
http://telecom.cide.edu/basededatos.html (last visited March 10, 2003) [hereafter “Telecom-Data”].
Adriana Vizcaino, Disminuye la Demanda de las PC, REFORMA, February 25, 2003, at 2A (reporting a 5.7%
reduction in Latin American PC sales between 2001 and 2002); Veronica Sanchez, Bajan Ventas de PCs en
AL, REFORMA, March 3, 2003, at 2A.
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commercial credit, only an estimated 3.48 out of 100 citizens have access to the
Internet (see Figure 6).69
                                                                                                                             FIGURE 6
                                                                                                       INTERNET USERS V. PER CAPITA GDP
                                                                                (Source: World Bank and the International Telecommunications Union)

              Líneas Telefónicas por cada 1,000 habitantes / 1999

                                                                    700                                                              ALEMANIA
                                                                                                                                                                 SUIZA         ESTADOS
                                                                                                                                            HOLANDA                            UNIDOS
                                                                    600                                                                 FRANCIA
                                                                                                                                  REINO UNIDO                  JAPON

                                                                                                              REP. COREA                   ITALIA           IRLANDA

                                                                    400                                          PORTUGAL

                                                                                        FED. RUSA     CHILE     ARGENTINA
                                                                    200         COLOMBIA
                                                                                CHINA                  MEXICO
                                                                          0               5            10              15             20               25              30     35         40
                                                                                                     Producto Interno Bruto por habitante / $ miles de dólares / 1999 (PPA)

Mindful of the fact that the long term administrative and operational benefits to
be derived from the introduction of ICT based e-government programs will
remain unexploited in the absence of a critical mass of users, Mexico has
initiated a series of Internet connectivity enhancing measures.
    On a national level, the SCT has, as part of the e-México program, installed
Internet enabled computers for the benefit of the general public in post offices,
schools, libraries, and other government buildings. 70 The SCT has also taken
steps to increase rural access through the CCD (i.e., the Centros Comunitarios

      Telecom-Data, supra note 68. Other studies estimate that approximately 2%-5% of the population has
Internet             access.          Segundo            Informe            de           Gobierno,           at
http://informe.presidencia.gob.mx/Informes/2002Fox2/website/cfm/index.cfm (last visited November 12,
2002). Select has projected that the government’s current connectivity campaign will raise Mexico’s
Internet access rate to 37% by 2006. Select (Mexico), e-México: Gran Impulsor de la Industria de TIC, at
http://www.select.com.mx (last visited November 12, 2002). Mexico’s current Internet connectivity rates
are unevenly distributed across space, with higher Internet access levels in the northern and central parts
of the country and lower access levels in the south and south-east. Considered strictly in terms of
municipal connectivity, approximately 25% of the municipalities in the northern part of the country have
Internet access compared to an estimated 4% access rate for those located near and/or below the Isthmus
of       Tehuantepec.        Julio      Cesar      Margain,      Sistema        Nacional       e-México,      at
asil_forum_alis.ppt (last visited November 15, 2002).
      This initiative has been bolstered by the private sector’s parallel effort to bring the Internet to public
spaces (for example, the LADTAEL, Internet cafes, etc.).
R o b e r t M. K o s s i c k

Digitales) program. The objective of this program is to provide Internet service
(typically via satellite) to 10,000 marginalized communities by 2006. 71
    The example of these initiatives has not, moreover, been lost at the level of
the SAT. Focusing on those citizens whose lack of PC ownership may limit their
capacity to comply with electronic tax filing requirements, the SAT has made
Internet enabled computers available at many of its taxpayer assistance centers
and installed 84 online kiosks in other public locations throughout the

3.7        IT Systems

The lack of coordinated and updated information technology systems (i) within
the SAT, (ii) between the SAT and other dependencies or entities of
government, and (iii) between the SAT and other private sector entities
(including, for example, commercial banks, notary publics, CPAs, and individual
or corporate taxpayers) constitutes yet another impediment to the effective
operation of Mexico’s tax administration. Speaking to this issue, the World Bank
recently noted that “SAT’s use of technology suffers from a lack of prioritization
and coordination of efforts.”73
    A broad range of administrative and operational problems can be attributed
to the uncoordinated and largely outdated nature of the SAT’s information
technology systems. There are, for example, currently 260 (+) SAT databases
pertaining to different aspects of the taxpayer inscription and revenue
collection processes. This data, a large part of which is stored in centers
located throughout the country, can not be easily accessed by employees within
either the SAT or other government dependencies.74 Another glaring
manifestation of the uncoordinated state of the SAT’s information systems
entails the issuance and acceptance of the digital certificates used in
conjunction with electronic signatures. As currently structured, digital
certificates issued by and mutually acceptable to other dependencies and

     PND, supra note 1. If the government is to accomplish this goal, it will have to resolve the operational
and strategic difficulties that have emerged with the program’s implementation. Marcela Turati, Esperan
Internet para Estudiar, REFORMA, February 28, 2003, at 19A (noting that purpose of delivering computers to
marginalized communities defeated by lack of Internet connection, electricity, and training); Claudia
Salazar, Ofrecen Excel en Localidades Marginadas, REFORMA, March 2, 2003, at 19A (noting that the
computer training offered through CCDs does not always align with the most pressing needs of rural
     Impuestos por Internet, POLÍTICA DIGITAL, April 2002, at 26.
     WB, supra note 2.
     Efficient access to SAT data is further complicated by the fact that much of it is stored in hard copy.
As a result of this practice, a considerable quantity of basic SAT information will not be widely available
until it is (i) reconstructed (where lost or incomplete), (ii) digitalized, and (iii) uploaded to the SAT’s
central data center.
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entities of government can not be used for the realization of SAT specific
transactions.75 This failure of basic coordination leaves citizens with no choice
but to solicit and maintain multiple digital certificates corresponding to distinct
dependencies and entities of government. Finally, the use of outdated and/or
incompatible technology has given rise to extensive user problems in terms of
performing such basic tasks as accessing either SAT or Bank portals and
inputting data.76 These problems have, to date, impeded the SAT’s operational
effectiveness (by creating, for example, a situation where the information
needed for the realization of SAT functions and services is not readily
available), facilitated inefficiency inducing process redundancy, and
engendered ire amongst users.
    Convinced that the basic key to improving Mexico’s tax administration lies in
ICT, the SAT has emphasized the acquisition and deployment of cutting edge IT
solutions.77 The first step in this direction involved the conduction of a
“diagnostic” of all SAT systems, a fundamental part of which included the
“mapping” of traditional tax procedures and functions with an eye to (i)
locating all taxpayer points of contact, (ii) identifying steps and/or processes
that could be eliminated through the use of ICT, and (iii) assuring that the
administration’s IT applications and systems were capable of filling any ensuing
void. This step was followed by the 2002 installation of a communications
enhancing VPN.78 Said network will greatly facilitate the transmission of voice,
data, and other services between the SHCP, SAT, and private entities. 79
    The trend toward an increased use of and reliance on technology is
expected to intensify going forward insofar as an estimated 40% of the World
Bank and the government of Mexico’s U.S.$8280 “Tax Administration Institutional

      A certificates issued by SAT can, however, be used in conjunction with any SAT related transaction, be
it a declaración, dictamen, pago electrónico, etc.
       Access (including delays that lasted for days), functionality (mid-transmission system failures, non-
delivery of digitally stamped receipts, etc.), and compatibility (especially for Mac users) problems were
experienced with such frequency (according to one study, 30% of taxpayers reported having difficulty in
the realization of online tax transactions) during the Fall of 2002 that the SAT was required to extend the
prescribed filing and payment deadline. As a consequence of this experience, the SAT has issued
compatibility and installation manuals and, where appropriate, pushed banks to expand capacity by making
their networks 100% broadband. Armando Talamantes, Otorga SAT Prorroga para Pagar vía Internet,
REFORMA, August 21, 2002, at 1A; Tienen Líos para Pagar Impuestos vía Internet, REFORMA, August 16, 2002,
at 6A.
      A review of SAT contracts indicates that the Servicio purchased 194,142,166 pesos worth of IT related
goods and services during 2002. See El SAT Informa, supra note 67; Lupa, supra note 2 (reporting SHCP
plan to spend 337,706,000 pesos in 2003 modernizing Mexico’s tax collection system).
      This VPN was constructed jointly by the SHCP and the SAT for a total cost of 226,428,660. The SAT’s
participation in the project amounted to 180,546,482 pesos.
      Informe, supra note 11 (relating that this system will connect 329 physically discrete SAT facilities).
       U.S.$52 million of the total project value will be financed by a technical assistance loan from the
World Bank. The remaining U.S.$30 million will be financed by the Mexican government.
R o b e r t M. K o s s i c k

Development Project” is earmarked for the e-SAT program, technology services,
and the implementation of a state of the art information hub.81

3.8        Weak Digital Culture

The aforementioned implementation challenges are compounded by the weak
digital culture that exists in Mexico with respect to both public servants and
citizens. Leaving aside important questions regarding legal certainty and access,
many Mexicans are neither accustomed to managing their personal affairs online
nor familiar with the procedures, hardware, and software underlying Internet
transactions. This observation is underscored by the World Economic Forum’s
recent global survey on the use and application of ICT, the findings of which
placed Mexico below Argentina, Brazil, and Chile.82
     Mexico has taken several basic steps in its effort to overcome this obstacle.
First - and perhaps most importantly – the government has made electronic
filing and payments mandatory for those taxpayers in the padrón activo. This
action is significant to the extent that the government, in a single act of
regulation, succeeded in accelerating the closure of the socio-technological gap
between traditional pen and paper practices and ICT based tax transactions.
The potential shock of this mandatory approach to overcoming the general
public’s latent resistance to online processes has been tempered by (i) the
expansion of the SAT’s network of telephone, online, and walk in assistance
centers,83 (ii) the proactive conduction of informational and training campaigns
designed to increase citizens’ awareness and understanding of new online tax
procedures and mechanisms, and (iii) the possibility of making an electronic
payment with a tarjeta tributaria (in the event of an absolute cultural rejection

     Procurement of goods and services financed by the World Bank under the project would be carried out
in accordance with World Bank Guidelines for Procurement for IBRD Loans and IDA Credits. WB, supra note
2. A whopping U.S.$75.5 million of the U.S.$82 million project will be spent on the acquisition of IT goods
(U.S.$ 9.9 million) and consulting services (U.S.65.85 million). Id.
        World    Economic      Forum,    Global     Information      Technology  Report    2002-2003,    at
http://www.weforum.org (last visited March 10, 2003). Mexico was also ranked below Botswana in terms
of the use and application of ICT.
     There are 343 tax centers located throughout the republic according to the SAT. Both walk in and call
centers provided rapid and effective advice with respect to questions regarding both paper and Internet
based processes. But see WB, supra note 2 (noting the poor quality of the SAT’s taxpayer assistance
services). In addition to the aforementioned personal attention services, the SAT also makes available
(either in hard copy or as an Internet download) a broad variety of self help manuals and programs. A good
example in this regard is the Declarasat program.
   M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

of the Internet).84 The impact of these actions is, finally, strengthened by the
increased availability of private sector sponsored IT training programs. 85

3.9      Tying In the Informal Economy

The roots of Mexico’s informal economy extend back to pre-Columbian times, as
merchants brought goods from distant regions to be sold on petates in the open
air markets of the ancient Mexica capital of Tenochtitlan. This tradition,
preserved in the form of today’s tianguis, is alive and well.86 While estimates
regarding the scope and value of Mexico’s informal economy vary, studies
conducted by government agencies and international organizations indicate that
informal activity accounts for 12%-33% of GDP.87 Figure 7, infra, presents
comparative informal economy data from ILO and OECD studies.

                                                           FIGURE 7
                                                        (Source: OECD)

             COUNTRY                                   ILO ESTIMATES                              OECD ESTIMATES
              MEXICO                                          57                                        20 – 44
            ARGENTINA                                         53                                           ---
               BRAZIL                                         56                                           ---
               CHILE                                          51                                           ---
              TURKEY                                          ---                                          21

      These services are part of a larger, government wide initiative to strengthen the IT preparedness of
citizens. “Decreto de Presupuesto de Egresos de la Federación para el Ejercicio Fiscal 2002,” D.O., 17 de
enero de 2002.
       Examples of private sector entities that provide IT training include the CIDE, the Universidad
Iberoamericana, the ITAM, and Microsoft. See Programa Telecom-CIDE, at http://telecom.cide.edu (last
visited March 14, 2003); Diplomados de Computación, Tecnología, e Innovación, at
http://www.itam.mx/extuni/fraextuni.html (last visited March 14, 2003); Diplomado en Nuevas
Tecnologías, at http://www.uia.mx/ibero/dec/default.html (last visited March 14, 2003); and Graham
Gori, Fears About Microsoft Return, in Mexico, N.Y. TIMES, April 24, 2002 (noting that Microsoft will
“provide millions of dollars worth of free or discount-price software, training, and support over the next
five years and train 20,000 technicians and engineers to run hundreds of e-México public computer
centers” and, furthermore, that Intel has agreed to “train 17,000 elementary school teachers in computer
      In an example of one of the many contrasts which color Mexico’s reality, tianguis dedicated to the sale
of contraband and pirated goods spill down the street adjacent to the federal supreme court.
      OECD, supra note 1; INEGI, at http://www.inegi.gob.mx (last visited March 15, 2003).
R o b e r t M. K o s s i c k

During periods of economic difficulty – for example, such as that currently being
experienced in Mexico – the ranks of the informal economy tend to swell. 88
Informal economy laborers commonly have neither a bank account nor an RFC
inscription. This tendency is partially reflected in the de minimis number of
citizens that use online banking services.89 To the extent that an estimated 55%-
57% of Mexico’s economically productive workers (approximately 12 million
individuals) pertain to the informal economy, this group’s low rate of RFC
inscription represents a significant amount of foregone tax revenue.90 Touching
on this issue, the OECD recently described Mexico’s informal economy as a
“major complicating factor” with respect to the administration of Mexico’s tax
    In furtherance of its overall goal of increasing tax revenue, the SAT has
identified the informal economy as a segment which could and should be making
a larger fiscal contribution. This new perspective is reflected in the formulation
of tax policies and strategies geared towards the workers and merchants of the
informal economy (for example, the Régimen de Contribuyentes Pequeños). The
most important practical steps the SAT has taken in this regard include (i) the
conduction of a nation wide information campaign designed to raise the
informal economy’s awareness its fiscal obligations (for example, the “Los que
No Deben, No Temen” campaign), (ii) the issuance of approximately 3.4 million
tarjetas tributarias (see Image 2),92 and (iii) the launching of the nationwide,
house-to-house “Barrido de Calles” program.93

     It is significant to note in this connection that Mexico’s informal economy expanded by an estimated
5.5% during 2002. INEGI, Encuesta Nacional de Empleo, 2002, at 2.
     Select, Usuarios de Internet en México 2002: Banca Electrónica por Internet, December 2002, at 3;
Georgina Garcia, Crece Banca Electrónica … Pero Aun Falta Confianza, REFORMA, June 17, 2002, at 8A
(noting that approximately 2.5 million Mexicans banked online in 2001).
     Mario Lopez, Los Reyes de la Calle, CAMBIO, January 6, 2002, at 62; OECD, supra note 1.
     Informe, supra note 11. Of the 3.4 million tarjetas tributarias cards issued, only 2.8 million could be
delivered. Where delivery was not possible, the most common reason involved the inaccuracy of the
recipient’s mailing information. Approximately 50% of the cards that were deliverable went to small
business owners under the Régimen de Contribuyentes Pequeños. The other half went to individual
     Sonia Perez, Busca SHCP a Evasores, REFORMA, May 24, 2003, at 19A (noting way in which this program
seeks to increase the number of informal merchants inscribed in the padrón).
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                                                           IMAGE 2

As a consequence of this latter step, informal workers and merchants that do
not otherwise have a bank account are able to accurately make their fiscal
contribution with the branch teller of any authorized bank. 94 It has been
estimated that improved tax collection techniques with respect to the informal
economy could result in the generation of an additional 120,000,000 pesos in
tributary revenue.95

3.10. Contingency Planning

Mexico’s rich mixture of natural and man made risks must be taken into account
in conjunction with the launch of any good or service, regardless of whether it
pertains to the government or private sector. In terms of natural risks, Mexico
experiences numerous earthquakes and hurricanes. Man-made risks are, on the
other hand, posed by revolutionary guerilla groups,96 terrorists, and hackers.
The SAT is especially sensitive to the threat presented by the last group insofar
as it has, in the recent past, experienced several hacks that are believed to be
related to money laundering activities. The necessity of undertaking actions
designed to keep would be money launderers from using the e-SAT for the
realization of illegal activities is underscored by (i) the high volume of money
currently laundered in Mexico and (ii) the otherwise weak state of Mexico’s

       A list of commercial banks authorized to receive tax payments is available at
http://www.sat.gob.mx/pagos_internet/built3.html. Each of these banks has entered into a formal
convenio with the SAT regarding the provision of this service.
     Consideran Insuficiente Estrategia Anti-Evasión, REFORMA, January 28, 2002, at 3A.
     While most observers perceive Mexico’s guerilla threat as being centered in the south of the country
(Chiapas, Tabasco, Oaxaca, etc.) there are also active guerilla groups in the country’s western (Guerrero)
and central (Estado de México) states. These groups, an example of which includes the ERP, have
committed acts of industrial and/or infrastructure sabotage in Mexico City and other densely populated
R o b e r t M. K o s s i c k

anti-laundering strategy.97 Increased progress in this regard would be beneficial
insofar as it could help shut down money laundering operations with linkages to
terrorist organizations, thereby putting Mexico in better compliance with its
obligations under Resolution 1333 of the United Nations Security Council.
    In light of the foregoing risks, the SAT has had to make business continuity
and disaster recovery IT contingency plans. The SAT has, in this regard, had the
good foresight to set up and implement a sophisticated controlled access system
with multiple state of the art firewalls and physically isolated application
servers and data processing/storage centers (Tlalpan and Queretaro). Looking
forward, the SAT intends to use part of the previously mentioned World Bank
loan to further strengthen internal security systems.98

3.11 Evaluation & Feedback

The SAT has traditionally had a closed administrative and operational culture
that neither took into account (or was otherwise responsive to) the needs of
citizens nor sought out taxpayer feedback. Under this approach, the SAT was
generally perceived as being a monolithic and inefficient organization with little
capacity for inspiring citizen confidence (or compliance).
    The 2000 alteration of executive power, considered in conjunction with the
implementation of the Fox administration’s “Good Government” program 99 and
the increased availability of ICT based citizen participation mechanisms, has
done much to break the inertia of the past and strengthen the role of citizens in
the arena of government policy. This general trend is, at the level of the SAT,
evident in the way in which the Servicio has begun to proactively seek out and
take into account the needs, perspectives, and suggestions of Mexican taxpayers
in designing and implementing online tax services. To this end, the SAT has,
over the course of the last year, initiated several evaluation and input
mechanisms including, for example, the use of surveys and focus groups. 100 The
SAT has, in a similar vein, discussed (but not yet implemented) the idea of using

      Lilia Carrillo, Cumplen a Medidas Normas Antilavado, REFORMA, March 28, 2003, at 1 (noting that the
Mexican government is in total compliance with less than half of the 28 obligatory anti-money laundering
recommendations set forth by the Grupo de Acción Financiera Internacional).
     WB, supra note 2.
      Consistent with globally accepted best practices in public administration, a key part of the Fox
administration’s program of good government involves increasing the availability of online citizen
participation. Abraham Sotelo, e-Government: A Strategy for Government Innovation, presentation
delivered to the U.S. Trade and Development Agency (December 3, 2002) (copy on file with author).
       The SAT commissioned 1,199,090 pesos worth of surveys and focus groups during 2002. While the SAT
declines to release survey results, tax administration officials assert that citizen feedback regarding online
services has been positive. This view presents a contrast to anecdotal information regarding taxpayer
perceptions gathered by the author.
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a standardized annual scorecard.101 The introduction of such a tool would be
valuable in that it could conduce to the identification and evaluation of citizen
participation tendencies through time. Finally, as has been the case with
respect to other aspects of the SAT’s ongoing overhaul, the movement towards
increased levels of citizen participation is expected to intensify as a result of
the previously noted loan from the World Bank.102

4. Benefits

The development of the e-SAT has been beneficial for Mexico’s system of tax
administration in several ways. The details of these benefits are set forth

4.1 Efficiency Savings Resulting from Use of Electronic Filing &

The SAT received 147,405 electronically filed declarations and 180,123,000,000
pesos worth of online tax payments between August 2001 and July 2002. The
majority of these transactions were realized by corporate taxpayers. 103 Mexico’s
recent (August 2002) campaign to expand the use of online declaration filing
and payment practices to an expanded range of citizens resulted, moreover, in
the electronic presentation of 200,000 declarations and 1,600,000 payments
(400,000 realized through the portal of a commercial bank, 1.2 million tendered
via tarjeta tributaria).104 On the basis of these early results, government
officials estimate that at least 80% of all Mexican tax revenue is now collected
    Electronic filing practices conduce to the conservation of scarce temporal
and financial resources for both citizens and government. Focusing on the issue
of temporal savings, electronic filing and payment practices can reduce the
number of physical trips that citizens have to make to the SAT center for the
purpose of delivering registration, declaration, and payment related tax

       The same outcome could be reached/achieved by placing an evaluation mechanism on SAT page.
       As structured, the projects to be realized with World Bank funding call for project progress evaluation
pursuant to the use of annual surveys. WB, supra note 2.
       Informe, supra note 11.
       Armando Talamantes, Declaran 1.8 Millones al SAT vía Electrónica, REFORMA, August 27, 2002, at 1A.
       Abraham Sotelo, Mexico, presentation delivered to the 36th ICA Conference (October 2002) (copy on
file with author).
R o b e r t M. K o s s i c k

documents.106 This reduction in travel can produce substantial time and cost
savings for citizens, particularly those who live at a great distance form tax
centers or whose communities are otherwise not served by a mobile tax facility.
Moreover, to the extent that online practices typically condense what had been
multiple tax documents into one, taxpayers spend less time securing forms and
supplying information.
    Government time savings associated with online tax practices flow, in turn,
from the expedited process for receiving and posting payments. In this regard,
SAT officials relate that processes which previously took up to two weeks to
complete (for example receipt, confirmation, and posting of a tax payment) are
now instantaneously accomplished for a fraction of the cost.
    As for the issue of the conservation of financial resources, it has been
estimated that the introduction of online tax practices will result in a 70%
decline in the quantity of paper purchased, used, and stored by the SAT.107 The
cost savings expected to accrue to the SHCP (including the SAT) as a result of
this change in practice are estimated to be on the order of 3.5 million pesos. 108
    The technology driven reduction in the number of employees retained by
the SAT has also resulted in substantial savings. More specifically, technology
related downsizing enabled the SHCP (including the SAT) to save at least 12
million pesos in 2001.109 These actions and outcomes are consistent with the
SAT’s goal of reducing the total size of the Servicio by 30% over the next five

4.2        Disintermediation Effect

Other benefits flow from the ICT driven disintermediation of tax declaration
filing and payment processes. One important example entails the accuracy of
information submitted by taxpayers. In establishing individual online taxpayer
accounts and automated tax preparation programs – or, alternatively, tarjetas
tributarias with pre-recorded tax payer information – the SAT has limited the
potential for human and/or clinical error. The elimination of errors alone –
whether intentional or not – will do much to improve tax administration and
collection in Mexico.
     The second major benefit in this regard stems from the way that the use of
an electronic filing and payment system obviates the need for many citizen-

      An example in this regards involves the way in which 556 corporations obtained their taxpayer IDs
through the SAT’s online RFC inscription service between August 2001 and July 2002. Informe, supra note
      This figure was supplied during the course of personal interviews with SAT officials.
      Informe, supra note 11.
      WB, supra note 2.
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public servant interactions. While it would be naïve to think that ICT based
applications such as the e-SAT are immune from new forms of corruption, they
do complicate the commission of irregular acts by diminishing the level of
contact between the potential parties to corruption. 111 It is, in this connection,
important to note that the solicitation of “mordidas” by public servants was
recently identified as one of the gravest problems confronting the SAT. 112 These
measures, considered in tandem with the Servicio’s ongoing campaign to
overcome its reputation as being a “bastion” for corruption, 113 will bolster
taxpayer confidence.

4.3      The Collection & Dissemination of Mission Critical Information

The final benefit derived from the e-SAT involves the way in which the
attempted updating, digitalization, consolidation, and interconnection of SAT
information systems facilitates the collection and dissemination of mission
critical data and improves the Servicio’s performance. Pursuant to these steps,
the SAT is building a more comprehensive, accurate, and accessible database,
the contents of which can be used to pinpoint the whereabouts of citizens
suspected of evasion or fraud (via the “Sistema de Información Geográfico-
Fiscal”),114 increase the quantity and quality of audits (irrespective of a
taxpayer’s domicile), and provide SAT litigators with the data needed to better
prepare for and prosecute cases. The last two content applications are
especially positive insofar as (i) many of the tax fraud and evasion cases
investigated and prosecuted by the SAT originate in states quite distant from its
Mexico City headquarters (see Figure 8) and (ii) a more effective prosecutorial
record could help free up the country’s increasingly congested tax court

      Hugo de la Torre, Enfrente el SAT Enemigo en Casa, REFORMA, March 17, 2003, at 1.
      The SAT has, pursuant to its participation in the inter-secretarial “Programa para la Transparencia y
el Combate a la Corrupción,” fired, released, or retired approximately 2,600 dishonest or corrupt officials
since the start of the Fox administration. The amount of foregone tax revenue associated with the
dishonest or corrupt conduct of SAT employees is estimated to be 7,269,000,000 pesos. Informe, supra
note 11; Comisión Intersecretarial para la Transparencia y el Combate a la Corrupción, at
http://www.programaanticorrupcion.gob.mx/inicio.html (last visited March 14, 2003); Recorta SAT a
Empleados por Corruptos, REFORMA, December 4, 2002, at 3A.
      The SAT has, to date, used this system to map the physical location of 377,488 taxpayers. A special
unit within the SAT (the Grupo Especial de Localización, or “GEL”) has, moreover, been formed for the
purpose of locating the approximately 1.5 million taxpayers that are registered in the padrón but not
otherwise locatable. In what constitutes a first step towards this goal, the SAT prioritized the location of
59,188 high priority missing taxpayers. As of July 2002, the GEL – using geo-fiscal information technology –
had succeeded in locating 17,165 (29%) of the targeted taxpayers. Complete success in this regard could
result in the SAT’s recovery of the 92,983,100,000 pesos currently classified as “non-recoverable.”
Informe, supra note 11; Trimester Informe, supra note 7.
R o b e r t M. K o s s i c k

dockets.115 The accomplishment of these objectives would, by extension,
strengthen the SAT’s message to would be tax evaders regarding the wisdom of
voluntary tax compliance.

                                                                                      FIGURE 8
                                         (1ST INSTANCE, 2000)



                                  BCS                                 59
                                                                                           Coah .

                                                             1              Dgo
                                                                                        Zac .                    Tam .
                                                                                         0                        99
                                                                            Nay .
                                                                             0                                                              Tlax.
                                                           Ags .                                                                              6                      Yuc .
                                                            2                                       Gto.                                                              2
                                                                                                     0           Hgo.
                            0-4                                               Jal .                               0
                                                                               5                                                                                       Q. Roo
                                                                                                Mich .       Mex .                             Tab.
                                                                                                                                  Ver.                       Cam .        2
                                                                                                  0           1                                 1
                                                                                                                         Pue .     1                          4
                            5-14                                   Col.                                                   1
                                                                                                         Gro .
                                                                                      DF                  0
                            15+                                                                                                  Oax .              Chis .
                                                                                                                                  1                  2
                                                                                                     Mor .
                           Source: Estadísticas Penales en Materia Penal, INEGI 2001.

4.4        Prospective Impact of Benefits

Given the relatively incipient and still evolving nature of the e-SAT, the
presentation of time series data geared towards the articulation of definitive
conclusions regarding the program’s impact is pre-mature. That is,

      Excessively liberal amparo procedures, an ineffective framework for regulating private sector
attorney conduct, the non-existence of legal responsibility for the filing of procedurally and/or factually
deficient tax charges, and the non-erga omnes quality of amparo rulings conduce to continued court
docket congestion and the over-extension of government resources. Informe, supra note 11 (noting that
43,500 tax related amparos are currently pending); Tribunal Federal de Justicia Fiscal y Administrativa, at
http://www.tff.gob.mx/Tribunal.htm (last visited March 14, 2003); Karina Aviles, Los Sectores Ricos No
Quieren Pagar Impuestos Consideran Especialistas de la UNAM, LA JORNADA, January 11, 2002, at 5 (noting
that wealthy Mexicans avoid paying taxes either by outright evasion or the filing of delay inducing
amparos). While there has been some discussion within the legal community regarding the need for
amparo reform, this has yet to transpire. See U.N. ESCOR, 58th Sess., Provisional Agenda Item 11(d), at 15,
U.N. Doc. E/CN.4/2002/72/Add.1 (2002) (noting the Mexican Supreme Court’s opinion that the country’s
1936 amparo law no longer corresponds to the needs of modern society).
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notwithstanding the fact that the e-SAT has been up and running at various
levels of development for over the course of two administrations and several
years, the program’s disjointed progression precludes, for the time being, a
more empirical evaluation of its impact.
    This said, however, it is reasonable to think that the e-SAT will, assuming
proper future development, play a vital role in helping the SAT reach its
intertwined goals of becoming more efficient with fewer people, increasing the
number of registered taxpayers, and collecting greater amounts of tributary
revenue. These outcomes could help Mexico (i) reduce the budget volatility it
regularly experiences as a result of its continued reliance on petroleum and
other non-tributary sources of revenue and (ii) raise the level of government
expenditure. As Figure 9, infra, illustrates with respect to the latter point,
Mexico’s level of government expenditure as a percentage of GDP is one of the
lowest recorded for OECD member nations.116

                                                           FIGURE 9
                                 GOVERNMENT EXPENDITURE (AVERAGE) 1990-1996
                                                 AS A PERCENTAGE OF GDP
                                                        (Source: OECD)

   Increased levels of revenue would, in turn, strengthen Mexico’s capacity for
planning and executing socially beneficial programs and development inducing

     Fernando Montes-Negret, Fiscal Sustainability, in MEXICO: A COMPREHENSIVE DEVELOPMENT AGENDA FOR THE
NEW ERA 51, 54 (Marcelo M. Giugale ed., 2001) (noting that public investment in Mexico has fallen from over
12% of GDP in 1981 to less that 2% in 1998).
R o b e r t M. K o s s i c k

projects.117 This point is underscored by the OECD’s contention that increased
revenue resulting from taxation can be beneficial for an economy to the extent
that it “provides the financial basis for the provision of public goods that
improve average living standards and social welfare.” This report goes on to
relate that “More and better public goods and services may also increase the
productivity of private fixed and human capital and hence increase economic
growth. This is particularly true in countries with underdeveloped human and
physical capital. In addition, government transfers may reduce poverty and
improves social cohesion.” The World Bank reinforces this thought when it notes
that “raising more resources from a stronger tax system is essential for
expanding the government program of social sector services and infrastructure
    The final beneficial impact worth noting involves the way in which the e-SAT
can strengthen Mexico’s stature within the overall e-government universe. It is,
in this connection, likely that the continued development of the e-SAT –
considered in conjunction with the other innovative online service delivery
applications recently launched by the Fox administration (for example,
Compranet, Declaranet, Tramitanet, etc.) – will permit Mexico to consolidate
its position as a Latin American e-government leader.119

5. Lessons Learned

A number of lessons that bear on the subject of the development and
implementation of e-government programs can be extracted from Mexico’s
experience with the e-SAT
    The most obvious lesson involves the need for a long term plan that is
capable of transcending the vicissitudes of national and local politics. As noted,
supra, the inherent nature of politics in Mexico, together with the advent of
periodic party alteration and the rapid rate of technological change, has made
it difficult for the SAT to articulate and adhere to an overriding strategy for the

      Low levels of tributary revenue have resulted in a reduction in the amount of federal resources
transferred to the states and lesser public entities, the postponement of infrastructure projects, the
scaling back of public programs and/or services, and the occurrence of Mexico first trimester budget
deficit in twelve years. Ernesto Sarabia, Caen 9% Participaciones a Estados, REFORMA, April 4, 2002, at 1A;
Ernesto Sarabia, Va Rezagado Gasto en Infraestructura, REFORMA, August 6, 2002, at 1A (noting that 7.7%
decrease in public financing for infrastructure projects resulted in the postponement of 205 public works
between 2001 and 2002); Armando Talamantes, Vuelve Déficit Trimestral Tras 12 Anos Ausente, REFORMA,
May 4, 2002, at 1A.
      WBR, supra note 19.
      United Nations, Benchmarking E-Government: A Global Perspective, at http://www.unpan.org/e-
government/global%20leaders%20tables.htm (last visited August 19, 2002) Noting that Mexico has a “high”
capacity for e-government). Another e-government benchmarking study gave Mexico a ranking of 48 (out of
a field of 196 nations). Darrell M. West, WMRC Global E-Government Survey, October 2001, at
http://www.insidepolitics.org/egovt01int.html (last visited August 20, 2002).
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development of its e-SAT program. Had the SAT had the foresight and capacity
to create a long term strategy that was simultaneously compatible with both
Servicio and government wide objectives, it would have been in a better
position to avoid and/or manage the problems it has encountered with respect
to (i) the utility, scalability, and interoperability of its IT systems and (ii) the
delayed development and launching of its online fiscal services.
    Another basic lesson which flows from the SAT’s experience with the e-SAT
program (and, more generally, Mexico’s experience with the Sistema Nacional
e-México) involves the necessity of devising parallel strategies for overcoming
the obstacles posed by weak telecommunications infrastructures and low rates
of Internet connectivity. It is, in this regard, a waste of already scarce
government resources (financial and otherwise) to invest money in the
development of sophisticated e-government applications that will, ultimately,
only be easily accessible to a de minimis percentage of the population.
    A similar lesson involves the e-SAT’s legal framework. Close consideration
must be given to the degree of formalism present in the national legal culture.
Where it is high – as is the case in Mexico – legal and administrative reform with
respect to electronic signatures, data messages, archiving, privacy, and
information crimes (“delitos informáticos”) must precede (or at the latest
coincide with) the implementation of an e-government application. Absent this
foundation, judges and citizens will, respectively, lack the guidance and
confidence necessary for the application’s ultimate success.
    The final lesson to be taken from the SAT’s experience with the
development and implementation of the e-SAT centers on the importance of
disseminating information regarding the program’s progress. Prime examples of
steps taken in this connection by the SAT include the information campaign it
conducted with respect to the (mostly) successful distribution of tarjetas
tributarias and the administrative benefits realized through the first widespread
exercise in electronic declaration filing and tax payment. These efforts have
had a positive impact insofar as they have helped the SAT (i) overcome pockets
of resistance to the e-SAT (both within and external to government), (ii)
mitigate against claims of administrative excess arising out of the Servicio’s
adoption of increasingly aggressive collection tactics, and (iii) demonstrate an
important sense of institutional forward momentum.
    While the aforementioned dissemination activities represent an important
step toward the inter-related goals of promoting the cause of e-SAT and
creating an informed and digitally oriented citizenry, there is substantial room
for improvement. Too frequently, for example, the benefits of dissemination
are either diminished or lost by the presentation of excessively vague,
aggregated, or temporally restricted information. This point is well illustrated

R o b e r t M. K o s s i c k

by the SAT’s relatively low score in the CIDE’s recent survey regarding the inter-
relationship between ICT and transparency (see Figure 10).120

                                                     FIGURE 10
                                       Dependency o
                                       Dependenciaor       Calificación de
                                          Entidad          Transparencia
                                                           Score (out of 10)
                                            PGR                   6

                                           SEGOB                  5

                                           SECTUR                 5

                                            SER                   4

                                            SSA                   4

                                          SEMARNAT                4

                                           SENER                 3.5

                                            SHCP                  3

                                          SECODAM                 3

                                            SSP                   3

                                            SAT                  2.5

                                            SEP                  2.5

                                          SEDESOL                2.5

                                             SE                   2

                                            STPS                 1.5

In acting, on a going forward basis, to strengthen the quality of the information
they disseminate, the Mexican government and the SAT could make further
headway towards their jointly held goals of building citizen and public servant
support for e-government applications and conveying a message of steady and
enduring progress.

6. Conclusion

Mexico has slowly but surely joined the global trend towards moving tax services
online. Following a somewhat timid start during the period 1997-2000, Mexico’s
e-SAT today can fairly claim a place alongside Chile’s “Servicio de Impuestos
Internos” and Brazil’s “Receitanet” in terms of setting the e-tax application
standard against which the other nations of Latin America will measure
themselves. As documented throughout this work, a broad variety of benefits
have accrued to Mexico through the development and implementation of the e-
SAT, primary examples of which include a rising number of electronically
realized and submitted declarations and payments, the enhanced accuracy and
coordination of the SAT’s databases and information systems, the attainment of
elevated levels of institutional transparency and accountability, and the more
efficient use of human, material, and temporal resources. These initial

     The transparency scores presented in Figure 10 reflect the dependency and/or entity compliance with
the transparency requirements set forth in article 7 of the Ley Federal de Transparencia y Acceso a la
Información Publica Gubernamental.
   M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

outcomes lend positive support to Jane Fountain’s ideas regarding the
possibility fo using ICT to improve the delivery of government services and
transform the citizen-government relationship.121 The scope and quantity of
benefits to be derived through the e-SAT are, going forward, expected to
expand as a result of the entrenchment of ICT based transaction practices
amongst taxpayers and the improvement of Mexico’s IT infrastructure. The
increased levels of tributary revenue and operational efficiency which are likely
to flow from the accomplishment of the e-SAT’s optimal development and the
reduction of Mexico’s “high” level of tax evasion122 will, finally, positively
contribute to the modernization of the Mexico’s economy and the improvement
of its position of global competitiveness.

     Hugo de la Torre, Lamenta Ortiz Evasión y Deficiencias Fiscales, REFORMA, April 29, 2003, at 1 (quoting
the Governor of the Bank of Mexico, Guillermo Ortiz).
R o b e r t M. K o s s i c k

                                                   ANNEX 1

                                      TRIBUTARY REVENUE COLLECTED

                               YEAR                                   AMOUNT (PESOS)
                               2002                                  729,429,600,000
                               2001                                  651,430,000,000
                               2000                                  578,990,000,000
          Source: SHCP

                                                PADRÓN ACTIVO
                               YEAR                                  TAXPAYERS (NUMBER)
                               2002                                      7,557,692
                               2001                                      7,147,600
                               2000                                      7,003,400
          Source: SHCP, SAT

                                      SHCP & SAT BUDGETS (PESOS)

                      YEAR                      SHCP                              SAT
                      2003                 22,326,460,000                         ----
                      2002                 22,774,680,000                    8,566,056,200
                      2001                 20,388,760,000                    8,129,953,277
                      2000                 19,585,500,000                    8,690,510,495
                      1999                 19,621,410,000                    8,180,987,722
          Source: SHCP, SAT, Programa de Presupuesto y Gasto Público CIDE.

  M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …

                                                         ANNEX 2

                                                        KEY URLS

     DEPENDENCY OR ENTITY                                                              URL
 Sistema de Administración
  Secretaria de Hacienda y
       Crédito Público
Presidencia de la República                                   http://www.presidencia.gob.mx
  Oficina de la Presidencia
      para la Innovación                                http://www.innova.presidencia.gob.mx
        Secretaría de
      Comunicaciones y                                                http://www.sct.gob.mx
 Sistema Nacional e-México                                      http://www.e-mexico.gob.mx
       e-México Portal                                               http://www.gob.mx
  Comisión Intersecretarial
 para la Transparencia y el                        http://www.programaanticorrupcion.gob.mx
  Combate a la Corrupción
Tribunal Federal de Justicia
   Fiscal y Administrativa
     Argentine Tax Site                                           http://www.afip.gov.ar
      Brazilian Tax Site                                    http://www.receita.fazenda.gov.br
       Chilean Tax Site                                              http://www.sii.cl

                                              KEY E-SAT LEGISLATION

Onceava Resolución de Modificaciones a la Resolución Miscelánea Fiscal para
1997 y sus Anexos 1 y 14, D.O., 13 de febrero de 1998.
Decreto por El que Se Reforman y Adicionan Diversas Disposiciones del
Código Civil para el Distrito Federal en Materia Común y para Toda la
Republica en Materia Federal, del Código Federal de Procedimientos Civiles,
del Código de Comercio, y de la Ley Federal de Protección al Consumidor,
D.O., 29 de mayo de 2000.
Decreto de Presupuesto de Egresos de la Federación para el Ejercicio Fiscal
2002, D.O., 17 de enero de 2002.
Resolución Miscelánea Fiscal para 2002 y sus Anexos 1, 4 y 14, D.O., 30 de
mayo de 2002.
Norma Oficial Mexicana NOM 151-SCFI-2002, Practicas Comerciales –
Requisitos que Deben Observarse para la Conservación de Mensajes de

R o b e r t M. K o s s i c k

Datos, D.O., 4 de junio de 2002.
Decreto por el que se Reforma, Adiciona y Deroga Diversas Disposiciones del
Código Fiscal de la Federación, Gaceta Parlamentaria, 14 de diciembre de
Décima Segunda Resolución de Modificaciones a la Resolución Miscelánea
Fiscal para 2002 y Anexos 4, 5, 7, 8, 11, 15 y 18, D.O., 30 de diciembre de

M O D E R N I Z I N G M E X I C O ’ S T A X A D M I N I S TR A T I O N : T H E D E V E L O P ME N T , I MP L E M E N TA T I O N …


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