Mexico’s Tax Hikes Hit Border Residents Hard
Tuesday, January 7, 2014
Mexico rang in the new year with a set of new taxes, including a sales tax hike for the border region. The changes are not popular among most border residents and business owners.
Reyna Lopez owns a stylish clothing boutique in a shopping mall just off the main drag that runs through Ensenada. She fears the new taxes may make sluggish business the norm.
“People’s purchasing power is going to decrease,” Lopez said, “and so things like clothes and accessories, which is what we sell, are going to be considered a luxury.”
Residents of Mexico’s border region must now pay a 16 percent sales tax on most goods and services. That’s up from 11 percent.
The new tax brings the border region in line with the rest of Mexico.
Lopez hasn’t raised her prices yet, but she says she’ll have to soon.
“I, for example, have to pay rent for this shop,” Lopez said. “The tax on that is going to increase to 16 percent, so my expenses are going up, too.”
Mexico also launched a junk food tax on January first. That’s raising the price of cookies and sugary drinks, as well as things like jam, peanut butter and pan dulce, a Mexican staple.
María del Carmen López, who mans the cash register at a convenience store in Ensenada, says the store will have to raise prices on all products.
“When the price of one thing goes up, everything goes up,” she said. “It’s not just the cookies that are going to be more expensive, because we have to pay more for rent, water, electricity.”
At María del Carmen’s house, another expense is going up — food for her family’s German Shepard and two cats. Pet food, which used to be tax free, will now carry a 16 percent sales tax.