The tax-man cometh…

It’s a new trend with the Peña Nieto administration to release new, complex “reforms” at weird hours, and no surprise the long-awaited tax bill came out on Sunday, too late for the talking head shows and Sunday papers. Thank Huitzipotchti for the internet!

Business Week of course focuses on a raise in the capital gains tax and a raise of two percent (from 30 to 32 percent) for incomes over 500,000 pesos, and ignores the 16 percent flat Value Added Tax (IVA) — which, despite calls from the right, will not be applied to food (except for pet food and candy) and medication, which was guaranteed to bring still more protestors into the streets.

The tax bill is actually better than I anticipated. It closes several loopholes, treats PEMEX profits the same as other businesses which should free up the capital it supposedly needs (to steal?) and weakens the argument for injecting foreign capital into the state agency. Whether PEMEX, as a state agency that also runs a parallel social service network of hospitals and health care centers and the like SHOULD be considered just a business is another story. Incidentally, while the cost of gasoline will still go up every month, the bill calls for a smaller monthy increase.

Right-wing columnist (weirdly enough, published in the once leftist Sendero de Peje Noticias — “Lamp of Peje… the nickname for Ándres Manuel López Obrador — SDPNoticias), Federico Arroeola in cynically claiming the Peña Nieto tax bill undercuts the left is admitting that — aside from the increase in the sales tax — the rest of the bill is progressive.

However, on the same site, Hector Castillo argues that several provisions of the bill — including financing for unemployment insurance and an across the board old age pension — are concessions to the left.

Some may not be populist, particularly Although food for human consumption is exempt, feeding Fido and Fluffy and Tweety is going to be more expensive, with the sales tax applying to pet food and supplies. However, dogs and cats and birds are considered to “reflect a contributive social capacity” in bureaucratese, so there’s no tax bite when you buy a pet … at least a “nice” one.   Still undefined is what the tax is on “manifestly dangerous animals”… though one can assume the price of lions will go up.

Also apparently contributing to social capacity are the movies and circuses… tickets for which are specifically exempt from sales tax. Whether tickets for other forms of public entertainment — concerts, operas, ballets, luche libre, rodeos, bull fights, art shows, etc. — will be taxed isn’t yet clear. The film and clown industries must have better lobbyists than the ballerinas and matadors.

The rich and middle class won’t like it, but private education will be taxable. Maybe not such a bad thing. With public schools and public education under attack by this administration, there’s no telling how many parents will be now switching to the public schools — and demanding the types of resources be made available to their kids that they received in the privates.

There are some “sin taxes” being added. Soft drinks and sugar-added fruit drinks will be taxed at 10 percent, and the tax on alcoholic beverages goes up … to 26.5 percent on beer, and 53 percent on liquor. Boozers and wannabe diabetics unite!

The business people are already carping about not just the rise in capital gains taxes, and the new tax on stock market gains and dividends (a flat 10 percent) , but also that business taxes won’t go down… and most “loopholes” are being plugged.  Worse, according to Claudio X. González, President of something called “Consejo Mexicano de Hombres de Negocios” (The Council of Mexican MEN of Business… I guess no women own businesses or something) carps that

“Taxes simply transfer [money] from the private to the public sector”

Brilliant!

No word yet on whether reading materials will be taxed.  That would seriously suck!