Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

MEXICO AND LAME TAX REFORMS

September 12, 2007

The president of Mexico has announced a "tax reform" plan. Mexico could certainly use a low-rate, pro-growth tax plan. This isn't it. From USAToday.com:

To raise more money, the tax plan would:

•Create a corporate income tax based on companies' revenue, rather than their profits. Companies would have to pay the higher of the two figures, making tax deductions irrelevant.

•Require banks to deduct a 2% tax on deposits over a certain amount, probably $1,800 per month. The measure is aimed at catching people who are paid under the table.

•Give a $2.7 billion tax break to the Pemex petroleum company, so it can improve its refineries and explore for new oil reserves.

•Impose a 5.5% tax on gasoline, equivalent to about 13 cents per gallon.

Mexico has a corporate tax rate of 28%, an individual top rate of 30%, and a 15% value added tax (link). To bad Mexico isn't taking a bold move like Estonia, with its low-rate, broad-based 22% flat tax.

The USA Today story adds:

Making matters worse, 30% to 40% of Mexicans don't pay income tax, according to the Treasury Secretariat.

Not in Mexico, anyway.

      Bookmark: del.icio.us • Digg • reddit