Mexico Trucker Online

Editor’s Note: This came down faster than anyone had expected. This is part of Calderons economic plan to rejuvenate the economy and create jobs.

NUEVO LAREDO - The Mexican House of Representatives approved a new minimum corporate tax of 16 percent, known by its Spanish-language initials of IETU, late Thursday night by a 2-1 margin.The measure, a mainstay of President Felipe Calderón’s tax reform plan, takes effect Jan. 1.


Mexican business leaders, including those in the Sister City, protested loudly against the tax, fearing it will adversely affect investment and economic development nationwide. Officials at manufacturing plants along the border say the tax puts them at a severe disadvantage over plants in other countries, such as China.

The flat tax will be 16.5 percent next year, 17 percent in 2009 and 17.5 percent in 2010. Originally, Calderón had wanted a 16 percent rate in 2008 and 19 percent in 2009, but the House’s powerful finance committee changed that late Wednesday before sending the measure on to the full House.

Also approved late Thursday was a 2-percent monthly tax on all accounts at Mexico banks - individual as well as commercial - of more than 25,000 pesos, the equivalent of about $2,000 in U.S. dollars.

Supporters say the plan would bring in an additional 115 billion pesos next year, equivalent to about $10.5 billion in U.S. dollars, to augment the already proposed 2008 budget of $2.4 trillion pesos - about $217 billion in U.S. dollars.

Nuevo Laredoan Horacio Garza Garza, Mexican congressman and vice chair of the House finance committee, told the Laredo Morning Times that the committee modified Calderón’s plan to gain support from the other political parties and to answer some of the business sector’s concerns.

Garza said lobbyists for the maquiladora industry gave several persuasive presentations to the committee about the millions of pesos paid in salaries by their clients every week, saying the maquilas would be paying an unfair share of the new taxes compared with other businesses because the maquilas are labor-intensive.

The congressman said special deductions for salaries, employee benefits and other capital-related expenses were approved by the committee, and that the businesses seemed to be appeased because their issues were addressed.

“Their competitive status will be maintained,” Garza said. “We reviewed the themes of the reform with the lobbyists and we considered their points of view.”

“It (the original reform plan) had not taken into account salaries, benefits, amortization, accumulated losses, depreciation and past investment that had not yet been amortized,” Garza said, explaining that relief for all those areas has been included in the reform bill.

Jorge Viñals, head of Nuevo Laredo’s council of business and industry leaders, known by its Spanish-language initials, CODEIN, was not mollified.

“This will seriously affect capital investment,” Viñals said, adding that the leaders plan to meet later today to discuss what action can be taken.

Congressman Garza said the point of the tax reform is to ensure that all citizens - individuals as well as business owners - pay their fair share in taxes. While the deductions will help maquiladoras, it won’t mean they can avoid paying taxes completely, he said, but the main targets of the reform plan are the country’s major corporations. Under current law, these businesses pay little or no tax.

“The largest companies pay only some 20,000 pesos in taxes on income,” Garza said. “Compared to other countries, it is a meager share.”

The congressman acknowledged that not all sectors would be pleased with the plan, but said it was only fair that everyone pay something.

Garza said the changes in the tax law mean that investors in the stock market also will have to pay taxes on their transactions; currently, investors also pay little to nothing in taxes.

“We are going to … clean this country of tax evaders,” he said.

Garza indicated that while the tax reform approved by the Mexican Congress is a good one, it’s not going to solve all of the country’s problems.

“But … there will be control,” he said. “The advantages will be for everyone - no more favoritism.”