Aventuras con facturas: Notes on some of Mexico's self-inflicted fiscal wounds

Cholula, Puebla, Mexico, July 2023

1.

This is a story of how the smallest actions and interactions in our daily lives are enmeshed in the largest systems that channel the social world's energies—systems that have their logic but that, at various junctures, just might be self-defeating. Ask for the bill at the end of a restaurant meal, call an Uber, grumble with a friend about the bean counters who are complicating your life unnecessarily, try to decide if you should be having a beer with your tacos—as tiny and mundane as these situations are, they participate of our world's broadest social, political, and economic currents.

Say that, as part of your work, you are spending money in Mexico that a local institution is supposed to reimburse. You may be Mexican, or you may be a foreigner like I am. It makes no difference. The institution may be an employer or an organization that will pay travel expenses in exchange for an otherwise unpaid lecture or consultation—or something. It is going to get complicated fast, and you are going to get a tutorial in the intricacies of Mexico's public finances.

This situation may seem banal and boring, but it is not; it provides a revealing, ground-level window into some of the difficulties the country faces in its economic, social, and political development. Mexico is hardly alone in these difficulties, but every country has its own way of struggling. As Leo Tolstoy wrote about families in Anna Karenina, “… each unhappy family is unhappy in its own way.”¹ When it comes to taxes and such, it is hard to find a truly happy country.

Mexico is plagued with the worst fiscal capacity among the 38 member countries of the Organisation for Economic Co-operation and Development (OECD), at 16.7% of gross domestic product (GDP) in 2021—a marked improvement from 2005, when it was just over 11%. The only other member country that is at less than 20% is Colombia, at 19.5%.² Broadly speaking, fiscal capacity refers to a government's ability to generate revenues, and the primary means to do so is the levying of taxes of various kinds. Nobody likes taxes, but without them, a government in a capitalist economy will be unable to function.³ For a government to have a chance to enact programs that will play some dynamic part in improving the lives of people, it needs a healthy tax base—strong fiscal capacity. It may squander that chance through waste, inefficiency, corruption, or in other ways, and we will see that this concern plays a part in Mexico's quandaries, but without income, a government cannot even be corrupt.

One of the important flip sides of fiscal capacity for a country like Mexico is the magnitude of its “informal” or “underground” economy. The informal economy is that slice of economic activity that escapes official supervision, regulation…and taxes. The bigger the informal economy, the more potential the tax revenue that never materializes. No matter where we are from, we are all familiar with this reality—no country escapes the informal economy completely, but its relative and absolute size vary greatly.

One dimension of the informal economy is outright illegal. Think of drug trafficking from beginning to end of the production–consumption chain and it is easy to see why its participants want to hide their activity from government. Another dimension involves the kind of economic activity that, while otherwise legal, is hidden from government to avoid paying taxes. It reduces the cost of the transaction to the buyer (as is obvious) and to the seller, who has a better chance of making the sale and avoids the bureaucratic hassle and economic cost of administering the tax and passing it on to the relevant public authority.⁴

The gig economy adds its own wrinkle to this picture as many Uber drivers and Airbnb hosts (to pick just these two sector-leading companies) run unregistered operations. We will see how this scenario plays into the situation I am describing.

Both dimensions of the informal economy account for a large chunk of economic activity in general in Mexico. Its inherently criminal side will never contribute to the state's fiscal capacity…unless it stops being illegal in whole or in part. As for its legal-but-tax-evading dimension, governments (and, it could easily be argued, society in general) have a strong incentive to reduce its size—to bring as much of that activity as possible into the tax-paying category, thereby strengthening fiscal capacity. It is the task of fiscal authorities to make it happen.

In Mexico, the relevant public authority would be the Secretaría de Hacienda y Crédito Público —Hacienda for short—and its tax collecting arm, the Servicio de Administración Tributaria (SAT). Hacienda and SAT can be their own worst enemy.

2.

Say you eat a meal in a restaurant. When you ask for the bill, you will get a ticket, as it is often called in Mexico—the itemized bill for what you ate and drank. If you pay with a debit or credit card, you will be offered a receipt for the card transaction. In Canada, where I am from, if this meal can count as a professional expense, I can submit these documents (for instance, to my university) as proof of expense, and I will be reimbursed to the extent that I spent within the permitted parameters.

In both Canada and Mexico, the ticket includes the restaurant's fiscal identification number issued by the government. In Canada, the ticket's information on the transaction, including the amount of tax collected from me, goes automatically into the restaurant's computer database through specialized software mandated by government. This “point-of-sale” (POS) database must be reported periodically to the relevant fiscal authority,⁵ along with payment of corresponding sales tax amounts. We will see that in Mexico, the government has no direct access to the POS information, which is hugely problematic. At the other end of the Canadian chain of transactions in my example, the university keeps the documentation that it can present to the Canada Revenue Agency (CRA), if asked, in exchange for its reimbursement to me.

The crucial feature of this situation is that the tax reporting in Canada is systematic and automatic—as soon as each transaction is entered into the restaurant's (or other business') payment system, it automatically goes into a database that must be reported to the CRA. With the report goes a check, or these days, a bank transfer. There are businesses with a small volume of transactions that do not justify the purchase of the specialized tax-reporting computer hardware and software, and they are allowed to record and report the transactions manually. They are also subject to tax audits at short notice.

There are ways to avoid this system through cash payment and the absence of any paper or electronic trail—the informal economy—, and restaurants are notoriously creative in finding ways to hide transactions. In this area as in everything else about life in society, it is not a matter of yes or no, all or nothing, but rather of more or less. Still, in most economic sectors it is a burdensome, risky, and often self-defeating gambit, not worth the seller's effort. From the buyer's perspective, it can also be risky to go the informal cash route as the purchase will not be covered by warranty, the government's consumer protection system, or various kinds of insurance.

Another important aspect of the Canadian story is that the restaurant and my university do not have any kind of relationship; I am literally the middleman, having an economic relationship with both sides while they remain an economic stranger to each other. Meanwhile, we each have our own relationship with the CRA. In other words, the interactions between the various players are kept to a minimum, reducing the opportunities for mistakes, delays, fraud, and so on. This point is important.

If you are in Mexico and you expect your host university to reimburse a meal in exchange for the restaurant's itemized bill, card receipt, or both, you are most likely out of luck. I say “most likely” because few things in Mexican life are cut and dried. Very often, “no” is only an opening gambit on the part of someone who does not want the hassle that “yes” would trigger, or who may not know how to get to “yes” and does not want to go to the trouble of finding out. We will come back to this point later.

For now, as a rule…the university, following SAT rules, will require a factura⁶ from the restaurant. The restaurant, to issue it, will require the university's fiscal information. Many restaurants have a staff member dedicated to obtaining payment and eventually providing the factura. I recently experienced this system when I was a guest of a Mexican university for a few weeks. It was my task, typically when asking for the bill at the end of my meal, to ask for the factura and to provide the restaurant with the university's fiscal information. It used to be done by carrying and providing something like a business card with the university's relevant information, which still happens, but since the “electronic factura” was introduced in a 2014 reform of the system, electronic versions of a “card” are increasingly popular and are often swapped on WhatsApp. This important reform introduced a new player in the system, the big corporations known as factureros, to which SAT outsources the emission of facturas, in a classic neoliberal move of subcontracting state functions to the private sector. Not surprisingly, the factureros—who make vast profits from their privileged position—have their own interests in the operation of the system that may or may not align with those of either SAT or the system's users.

The factura, then, is a detailed invoice that includes the legal and fiscal information of (in this example) both the restaurant and the university.⁷ It also includes, in broad terms, the type of expense that has been incurred—a meal would typically be listed as alimentos y bebidas, food and beverages. The fiscal information required to be included in the factura is quite specific and subject to change. I was told several times over the course of 2 weeks that Hacienda had just tightened the rules, asking for more information. (Un)surprisingly, the university and the restaurants are not always on the same page regarding what information is needed. In any case, there is no reimbursement without a factura—and no tax report from the restaurant to SAT. Therefore, no tax money is going to SAT.

3.

The situation is a little more complicated than I just suggested, and it took me a while to get my head around the problem. Early on in my quest for facturas at the end of my meals, I was told that restaurants do not like to issue them because it triggers a report to SAT, to be followed by payment of the sales tax collected from their clients. No factura, no payment of taxes—the restaurant's motivation seemed obvious. Then, I began noticing that my tickets included the restaurants' fiscal registration number and a sales-tax line with the amount I paid. With this important information on all tickets, it started to seem unlikely that SAT was receiving sales-tax payments for only the tiny number of restaurant meals for which the client requested a factura. It became outright bizarre that payment of the sales tax by businesses to SAT would be triggered by clients' factura requests. The more I thought about it, the less any of it made any sense.

The solution to the mystery turns out to be rather obscure and convoluted, and quite mundane. Let me unpack it a bit, with the help of a friend who has seen up close how small businesses navigate the system.⁸ Restaurants—among other businesses, but I shall stick to my example—in fact must report their income and collection of sales tax to SAT at the end of each day. It is done by means of an aggregate factura issued in the name of the public in general. Payment of the sales tax to SAT is made based on the amounts reported in the facturas. When someone like me requests an individual factura, its amount is expected to be removed from the restaurant's aggregate factura; the two are then added up and forwarded to SAT.

From SAT's perspective, the big problem with how the system works is that the aggregate facturas are calculated based on tickets to which SAT has no access. When tallying its daily transactions to prepare its aggregate factura, a business can make a portion of its tickets disappear and provide SAT with information and tax income from the remaining portion of the tickets. The latter must be retained in case of an audit, but there is no way for SAT to know that some (or many) tickets have gone missing. The business then pockets the tax amounts from the disappeared tickets. Still, it must be careful to report an income (and to transfer a tax amount) that is reasonably credible and consistent over time to avoid triggering the suspicions of SAT auditors. Should there be an audit of a small restaurant, it would likely take the form of an inspector visiting the place and saying something like “show me your system.” The business owner may then make a discreet offer of a contribution to—let us say—the inspector's informal pension fund, thereby ensuring a happy audit outcome—a classic case of mordida, the small acts of corruption that have oiled many social and economic transactions in Mexico for generations.

Using the factura system, businesses transfer sales tax amounts to SAT, but they may transfer only a portion of the amounts they collect, a situation made possible by the absence of a point-of-sale connection to SAT's tax reporting and collection. By “disappearing” some quantity of their tickets, many businesses hide not only the sales taxes they collected but also some significant portion of their income. This fact must be balanced—again, for tax reporting purposes—by hiding some significant portion of their expenses. At the end of the fiscal year, there must exist some credible equilibrium between income and expense. To do so, an individual business can play with its own numbers or there can be collaboration between businesses playing together. A business may offer a discount to customers who agree not to require a factura or make life more difficult for those who insist—a two-sided version of mordida. From one business to the other, these dynamics cascade through the entire country's economy, contributing to a significant portion of its underground component.

From the perspective of the business, the production of individual facturas is problematic in several ways. They have the potential of attracting SAT's attention if their numbers and amounts seem out of proportion with aggregate factura amounts. At a more daily level, each factura that a business emits costs money through several channels—the business literally has to buy each one from a facturero; accountants have to be retained to process and manage tax flows; staff have to spend time producing the facturas, and so on. For the smaller businesses such as many cafes and restaurants, these costs easily become prohibitive. In its wisdom, SAT recognizes this fact and offers the smallest businesses a “simplified” program in which they must pay a flat rate of 2.5% of their receipts. It is potentially helpful for these businesses, and it is convenient for SAT, which has not been all that interested in committing resources to policing these tiny players.

4.

Let us go back to the nitty gritty of everyday life, keeping in mind that, as nobody likes paying taxes, the system just outlined creates a powerful incentive for the restaurant (or other business) to avoid issuing an individual factura.

On the university's side, the incentive is to demand from me the highest possible standard of SAT compliance, which businesses may or may not be able and willing to match. Doing so minimizes the risk to the university of an unfavorable audit just as it minimizes the amount and difficulty of the work to be carried out by the university comptroller's office. It also puts the onus on me and the frontline administrator who helps me navigate my expenses and reimbursement to provide every possible bit of documentation. Ultimately, several reimbursement applications will be denied, and I will be left holding the bag—unless my sponsors (the colleagues who invited me) on campus, embarrassed by their institution's obstruction, end up paying out of their own pocket without telling me. As far as the university is concerned, this setup is very convenient.

Following from my example, the bottom line is, on the one hand, that businesses are incentivized to undercount the bulk factura they produce at the end of the day, cheating SAT of some significant part of its potential revenue. On the other hand, in most restaurant meals in Mexico and for many other economic transactions, no factura is requested and none is offered. Even when a request is made, as we shall soon see, it can easily abort, which is where the fun begins. Enter—at last, you may think—my aventuras con facturas.

Say you are looking for a place to stay during your visit that will be admissible to a reimbursement. It turns out to be simple once you have made appropriate inquiries; scratch Airbnb from your list of options as hosts are not generally registered with SAT. They do not pay tax on their rental income, so they will not be able to issue a factura. Airbnb, the company, will be happy to issue one for its cut of the rental—its commission—but the bulk of your cost will be yours to bear. Scratch that, then, and go to a hotel, which will issue facturas as a matter of course, and you pay additional lodging taxes.

Then, you need to travel from the hotel to the university. Here, the difficulty is reversed—taxis will be happy, if you insist, to give you an ordinary receipt, but they will not issue facturas. Uber on the other hand will gladly give you a factura…if you have a personal tax registration number with Hacienda, which, of course, I do not. I eventually learned that there might be a way to deal with this difficulty by inserting the university's fiscal information into my Uber profile, but I would have had to do so in advance, at home in Canada, as I cannot run the app's two-factor identification from abroad. We found no solution to this problem, so I used Uber and sent the emailed receipts to my embattled administrator, and it is anybody's guess how it will turn out. It is anybody's guess because it was not entirely clear if instructions from the comptroller's office were as nonnegotiable as they seemed; might the “no reimbursement for an ordinary receipt” line have been merely an opening gambit, intended to keep the comptroller's life easy? Who knows?

Then, of course, you have to eat…and deal with restaurants' factura management systems. I am thinking here of their social systems for handling factura requests, not merely the technical SAT-directed ones, the first purpose of many such social systems being to avoid giving a factura. In one case, the ticket I received at the end of the meal had a line saying that requests for facturas should be made when ordering the meal. Obviously, that ship had sailed.

In many other cases, there was another kind of problem: like in Canada, universities do not want or are not allowed to reimburse for alcoholic drinks. Now, a bebida (drink) can be coffee or orange juice but it can also be wine, beer, or tequila. It was made clear to me on behalf of the university's comptroller that no reimbursement would be forthcoming should a factura mention bebidas. Although the drink might well be a coffee or a Diet Coke, or an agua de jamaica (hibiscus flower drink), the mere possibility that it could be a beer is enough to disqualify the factura from being reimbursed. Here, the university's comptroller might have been going overboard with preemptive extreme compliance, or maybe not; again, who knows?

When told of this university requirement, several restaurant managers responded that their system would only allow them to enter alimentos y bebidas (food and beverages) in the appropriate cell of the electronic form. When they clicked on the cell, predetermined options would present and, for a meal, alimentos y bebidas was it. There was nothing they could do about it. Yet, other restaurant managers had no problem; they could readily enter alimentos (food) only, or some equivalent that would not mention drink.

This story shows, among other things, that facturas that actually exist can serve to hide the purchase of alcohol, even as corresponding tickets list the alcoholic beverages that were ordered. This outcome is the exact opposite of the objectives the policy pursues in at least two ways—first, purchases of alcohol will be reimbursed; second, this reimbursement will be made possible through fraud.

Obstacles could still come in a variety of forms. The most obvious was the way in which changes in SAT's demands reached or did not reach the various players in this morality play. Keep in mind that “reach” can be a very subjective term; it could be that a particular demand had been officially received but nobody had gotten around to implementing it, resulting in a “not reached” practical outcome.

Initially, my administrator gave me a laminated card with the university's information, including the email address where the factura should be sent. I had seen many of these cards over many years of participating in activities reimbursed by Mexican institutions. These little cards worked. Then, restaurant managers started to tell me that a crucial new piece of information was missing from the card, so they could not issue a factura. Back at the university, the administrator saw the difficulty and sent me the missing bit over WhatsApp. This solution satisfied some managers, but others said that another new thing was still missing. By this point, my administrator recognized the need for a comprehensive solution and sent me by WhatsApp an entire new electronic version of the card, fully updated. Yet, I would soon learn, it was now missing the needed email address, which I provided by pulling out the old laminated-paper card.

Another nice trick was for the restaurant to give me a pen and a form to fill out with all the university's information. This paper would eventually be turned over to their billing person who would email the factura. I have so-so handwriting, and I routinely write outside the box when I have to fill a form, with my information increasingly less legible as I go along. I am sure I am not the only person so afflicted. In any case, I filled a few of these factura forms, with mixed results.

In one nice Italian restaurant, I asked for a factura that would only mention alimentos or some equivalent—insisting that bebidas not be mentioned. No problem, I was told. A factura was issued and printed; I put the paper in my pocket and left without looking at it (it was my first night in town). The next morning my administrator showed me that the factura said alimentos y bebidas, so I returned to the restaurant later with the offending document and asked them to fix it. I was first told it could not be done. This response was followed by some sotto voce discussion between staffers, and at length I got a new factura. In the process, the restaurant also had to cancel the first one with SAT—an electronic request that could have been turned down, which would have left me stranded.

Another situation then presented itself. Having explained that I needed a factura with no mention of bebidas, I found the manager entirely cooperative. He took a photo of my information on his iPhone and promised to email the factura to my university administrator and to send me a copy on WhatsApp, which is common practice. Then, nothing happened; he never sent anything.

As with all other factura issues, I had until the end of the calendar month to reach out to the restaurant to get this no-show fixed. I was not optimistic, but by this point I had decided to write about the whole sorry saga; I would go back to the restaurant and see where it led. In the meantime, my administrator had phoned the restaurant (a good-sized and pretty nice place with excellent tacos, part of a small chain), where somehow a cook picked up the phone. He said my administrator needed to speak with the manager, Juan Carlos, who was not there just then. I trekked to the restaurant and found a small group of staffers gathered near the entrance. When I asked for Juan Carlos, they all looked at each other and said, “who?”. It seemed that no such person worked there. I then asked for the manager—whatever that person's name might be—and was taken to a table to wait for him. He showed up after a few minutes, I told my story, and he said, “no problem.”

I insisted again on the no bebidas thing, which he fully acknowledged. We went to his computer, with me looking over his shoulder. It took him about 15 min to access the file (slow system), enter the information, and print the factura…which of course said alimentos y bebidas. When I pointed it out to him, repeating (nicely) that such a document was of no use to me, he sighed and said he would fix it. First, he could not find a solo alimentos option on his electronic form but eventually figured it out. Then, he tried to cancel the first factura on the SAT website…and got stuck. The spinning wheel of death on the screen would not go away. He tried and tried.

As time passed, I took the opportunity to point out to him the junior manager who had “helped” me the first time and was now hovering at some distance from us. My man shrugged and kept trying for about 45 min after he had printed the misbegotten factura. I would normally have put an end to his suffering earlier, but I was now in full fact-finding mode. I wanted to see this through, if possible, but I was getting hungry—and I was not going to eat there again if there was no positive resolution. In the end, I told him to give up on the spinning wheel of death, thanked him for his effort, and left with a useless factura in my pocket…and very hungry. All this pointless effort, of course, was the result of the first guy neglecting to follow up on my factura request.

I could go on, as nearly every meal I took over 2 weeks called for a factura request, triggering some variation on the drama. But I figure that you get the picture.

5.

Mexican businesses are obligated by law to provide a factura upon request. But they are often not asked, and when asked, well…

The remarkable thing about this story is that nobody should need facturas—not sellers, not buyers, and not SAT. Itemized bills, possibly marked as “paid in full,” should be all the proof of expense needed as up-to-date electronic equipment enters the transaction in the business's database, which then can be turned over to the taxman. Unrecorded cash transactions will escape this system, of course, but facturas are not issued for such things now anyway.

One may object to the broad argument that I am outlining here, on account of my applying a “Northern” standard to the experience and practices of a country that is not of the “North.” On principle, it should be a wrong thing to do, to judge Mexico on a Canadian scale. Some would say that, pragmatically, Mexico cannot be expected to match a variety of advanced capitalist practices. I am sensitive to this concern as I am critical, as a rule, of the cultural imperialism of what is usually called “the West” (or some variation of “the North”). In this kind of situation, though, I think it is the right thing to do to look at the factura system in this way. Indeed, it seems to me that saying here that Mexico cannot be expected not only underestimates the country's capacities but also proceeds from a form of racism.

Mexico would be able to deploy state-of-the-art systems for dealing with value-added tax such as those seen in Canada. Although Mexico is not a “high income” country and although it faces difficulties characteristic of what used to be called developing countries, its state system and economy operate in the technologically sophisticated ways—and at large scale, as a country of 120 million people—of participants in today's globalized and information-technology saturated world. Mexican institutions, private and public, operate the same large software systems that are run in Canada and elsewhere. Tens of millions of Mexicans, individuals, and organizations of all sizes use Excel and similar programs. With the current electronic factura system, even very small businesses need to connect, through Internet, upon request of an individual factura and at the end of each business day, to the factureros that will emit the facturas. These small businesses already bear the costs of connecting to Internet, purchasing facturas, obtaining the services of bookkeepers or accountants, and so on.

Meanwhile, some other tens of millions of Mexicans are too poor to have access to any digital technology, and uncounted numbers of small informal businesses only operate with cash. Whatever Hacienda does to capture its share of economic activity more efficiently, it will miss all these groups. What it does not need to do is push more transactions into the tax-evading zone.

Broadly speaking, Mexico and Canada operate in the same world of a capitalist economy, with the same kinds of government institutions, the same kinds of technology, and the same ways of raising public funds. Over the past decade and more, Mexico has been trying to improve its fiscal capacity and has found some success. The Mexican government wants to capture its proper share (however defined), through taxation, of as much of the country's economic activity as possible. The factura system is not helping; it is counterproductive. It multiplies transactions (facturas on top of tickets) and interactions (creating that connection, for instance, between the university and the restaurant), each unnecessary one creating opportunities for mistakes, fraud, and other trouble. It actively discourages the payment of taxes and actively encourages Mexicans to try to get around SAT. It should be ditched and replaced with one in which simple tickets do the job that facturas supposedly do now. Not only would doing so make my life, the lives of my friends at Mexican universities, and the lives of countless restaurant managers and business owners and most Mexicans easier, but it would also vastly increase the efficiency of the country's tax collection—bringing billions of pesos into state coffers every year.

There are reasons why the factura system exists that I suspect (although I could be wrong) lie in multiple layers of bureaucratic tradition going back to colonial times and Spanish state construction. I am sure it is deeply embedded in Hacienda's DNA, and conducting a genealogy of the whole thing would surely bring fascinating results. If only because of this embeddedness, the factura would not be easy to eliminate. In addition, the task of replacing it well would be daunting, but it does not mean the country would be unable to do so.

Having already noted that Mexico's fiscal capacity has improved over the last decades, I should make allowances for the possibility that factura reform and tinkering—including the digitization of the system in 2014—have contributed to that improvement. The current system could then be seen as Janus-faced—improving and worsening the situation at the same time, perhaps a transitional regime that strengthens somewhat the state's digital and fiscal capacity while continuing to enable Mexicans to evade a portion of their tax bill.

Ultimately, SAT already tracks and registers hundreds of millions of economic actors (people and businesses) and billions of transactions every year, but it also misses vast amounts of transactions because of the size of the country's informal economy, which the factura system boosts artificially. What I am thinking of, based on my Canadian experience, is a deepening of the granularity the Mexican government already practices while eliminating something—the factura—that probably started as a Band-Aid and became a parasite that draws resources away from its host.

6.

I shall close these remarks by situating them in the context of the contemporary social theory that informs them. If you have no time for theory, you have my leave to stop reading here.

It is not by accident that I am linking my very personal, micro experience with facturas to the macro capacities—fiscal and otherwise—of the Mexican state. More deeply, the state's global ability and ambition to reach systematically into individual lives, including their every economic transaction, is a fundamental feature of how modern, capitalist society works. States fail at this task, of course, as they never capture every transaction or activity they might target. Yet, failure is a matter of degree, which is another way of saying that success is a matter of degree.

We can understand this dynamic as a systemic partnership between state and capital, underpinning the functioning of both the capitalist economy and the politics of popular sovereignty. Michel Foucault's concepts of biopower and governmentality⁹ capture this whole story. In this perspective, “we the people” are possible and operationalized as a collective subject only to the extent that we as individual members are identified and counted, enabling us in turn to act as individual and collective political subjects; we are, at one and the same time, individual citizens (unless we are excluded as noncitizens) and whole populations. This is the sense in which biopower encompasses the life of the individual and the life of the population—ultimately, the life of the species. What we think of as our political freedoms and rights function within and are made possible by this very configuration of power.

The same goes for us as individual economic actors, whether in our guise as workers and producers, sellers and buyers, and so on. Our economic practices are framed and function within finely grained parameters that enable us as economic actors and are established jointly by capital and the state, subject to variable political pressure “from below.” These practices also channel resources to the state, enabling government to carry out its tasks—however such tasks may be defined. Whether roads are well built, and high-quality health services are publicly funded, or the security sector is favored at the expense of other public priorities, or vast amounts of public funds are corruptly channeled to regime-affiliated networks, all depend on resources first making their way to government coffers.

We, all of us (variously) in every country on the planet, live in ever more finely meshed grids of “power/knowledge,”¹⁰ where intelligibility and governability are flip sides of the same coin. How we understand ourselves, for instance as “citizens” or “consumers” or “workers” or “asylum seekers” or whatever; and how our lives are governed—by ourselves, by our communities, and by law—are fundamentally inseparable. Such is the modern realm of governmentality, which is to say that power operates through the government or management of populations and individuals, including through the making of particular kinds of individuals. If we think of ourselves as “taxpayers,” for instance, or as chronic tax evaders, it will not be unrelated to how we behave as economic and political actors. Indeed, as we think and act our way through this world, we not only comply; we also resist. Even as we see ourselves as taxpayers, we may push back on our government's use of its tax income; tax evasion may be construed as tax resistance anchored politically, and so on.

All this practice of government happens through the creation and operation in our everyday lives of particular mechanisms, procedures, and technologies, including such things as value-added taxes and facturas, the tax registration numbers issued by fiscal authorities to individuals and organizations, the Excel sheets and specialized software that record individual transactions and relevant amounts, the electronic machines that capture payments and send them to the Excel sheet, and so on.

In this big picture, Mexico's factura is a very peculiar beast. The stated purpose of its existence is twofold—on the one hand, it aims to discourage the kind of fraud and money laundering that happen through claims for expenses that may be nonexistent or smaller than the amount claimed; on the other hand, it is meant to enforce rules regarding the “claimability” of expenses reported to SAT (for instance, alcoholic beverages are not claimable). The factura is meant, then, to reinforce the application of the rule of law in the everyday life of ordinary economic transactions, to deepen Hacienda's reach into every nook and cranny of economic life, and to bring factura-seeking Mexicans to think of themselves as obedient followers of the Hacienda rule book—all of it united in undermining both dimensions of the informal economy.

To the extent that the formal and informal economy grow and shrink in an inverse relationship, it stands to reason that the factura system would seek to bolster the former. It was explicitly designed as a technology of power and is regularly tinkered with to do just that. The problem is that in a whole range of activities, the factura system is plainly dysfunctional—sellers do all they can to avoid providing facturas, buyers scheme to have them tailored to requirements no matter the actual expense involved, and a vast number of transactions just go uninvoiced, unfactura-ed. In complementary ways, sellers suffer from this system, as do buyers, as does Hacienda. Mexicans understand as a matter of course that facturas are not an inherent part of economic transactions but rather an artificial and burdensome fiscal instrument that is best avoided as often as possible.

Rather than bolstering the official economy and the state, the factura undermines them by inducing Mexicans to avoid facturas and to think of themselves as Hacienda-avoiding economic, social, and political subjects. Mexicans resist the factura, seeking to help themselves while keeping at bay a state they do not trust.

As I was finishing one of my last meals in Mexico this summer—a meal that was not subject to reimbursement—I asked for the bill. I was surprised when the server asked, “would you like a factura with that?” I took a moment to absorb this question and answered, “oh…thanks, but no.”