Mexican manufacturers’ benefits will be eliminated under tax reform code

[Judi Lynn]

Mexican manufacturers’ benefits will be eliminated under tax reform code
Juan Diego Quesada Mexico City 30 OCT 2013 - 18:32 CET

Mexico’s Senate on Wednesday passed an amendment to President Enrique Peña Nieto’s far-reaching fiscal reform law that will eliminate special value-added tax (VAT) rates and economic benefits for assembly plants located in cities and regions that border the United States and Central America.

Starting on January 1, the VAT rate would be raised in these areas from the current 11 percent to 16 percent, equal to what is charged in the rest of Mexico. Assembly plants, which have been one of the country’s leading economic vehicles, will no longer get any tax breaks as they have been receiving for the past 30 years. Those who are in favor of the reform argue that the state will be able to raise more revenue which can then be invested in communities in the frontier zones. But critics believe that the manufacturers and other businesses will lose out to industry across the northern border in the United States.

Peña Nieto has been under pressure from local businessmen and foreign-owned corporations. They have threatened to shut down operations and leave the country if the government raises taxes.

Workers at various assembly plants have threatened to call strikes, which would impact the economies on both sides of the border.

More:
http://elpais.com/elpais/2013/10/30/inenglish/1383154048_768416.html

[FrodosPet]

1. Great news for U.S. manufacturing

If the cost of manufacturing rising really puts them out of business the way they say it will, it should open up more stateside opportunities - particularly when you factor in the additional quality with fewer workers of most stateside manufacturing, as Lionel Trains found out the hard way.

[Judi Lynn]

2. Could be interesting. n/t