A leading source for news and analysis about Mexico and the U.S.-Mexican border.

Sunday, Sept. 29, 2013

Baja California congressman says it is quite possible to stop bill that would raise value-added tax along border to 16%

Tijuana Congresswoman Carmen López Segura removed from PRI leadership post for her opposition to value-added tax increase proposed by President Enrique Peña Nieto

Update, Oct. 7: Top PRI leader reported to have abandoned move to boost tax along border

        Jaime BonillaBaja California Congressman Jaime Bonilla said Saturday that he thinks it is quite possible to prevent an increase in the value-added tax along the border from 11% to 16%. The increase would make the tax uniform nationwide, something referred to in Mexico as "homologación."

        The increase is part of an overall fiscal reform.

        "The center does not understand us," he said, citing statistics that raising the value-added tax along the border could have major negative effects on the border economy.

         He also talked about the matter being a smokescreen or bargaining chip for the energy reform also being proposed by President Enrique Peña Nieto of the Institutional Revolutionary Party (PRI).

        Bonilla, a broadcasting executive who operates the Pacific Spanish Network, represents the Workers Party, as does the man he long worked with, Sen. Marco Antonio Blásquez. Blásquez, long a major radio personality, and Bonilla ran as part of a coalition led by former Mexico City Mayor Andrés Manuel López Obrador when he ran for president in 2012. Bonilla also long served on the scandal-plagued Otay Water District Board in southern San Diego County.

        Bonilla, president of the Chamber of Deputies' Commission on Northern Border Affairs, spoke to the Grupo Político Tijuana on Saturday.

Carmen Lopez Segura         Bonilla spoke of the PRI's internal problems, and how Baja California Deputy Carmen López Segura was kicked out of a leadership post after she said she would vote against raising the value-added tax along the border. López Segura, a Tijuana educator, became a congresswoman after María Elvia Amaya de Hank, who had been elected as an at-large congresswoman in July 2012, died two months later.
Update, Oct. 3: López Segura's removal from post as leader of Baja California's PRI federal deputies is formalized. Story, El Mexicano (PDF).

          Bonilla said Gov.-elect Francisco Vega of the National Action Party understands the situation and is trying to stop the increase. The PAN's congressional delegation also has announced its opposition to the increase.

          Bonilla also said he was shocked to see the level of hunger in San Quintín in the south of Baja California.  

Update, Oct. 1: Governor José Guadalupe Osuna Millán says the National Action Party and border legislators may try to use the value-added tax as a bargaining chip for their support of the energy reform bill. Story, El Mexicano (PDF). He said that although the PAN has 114 votes, border states need 137 other votes to stop the increase.
Update, Oct. 2: Osuna Millán reiterates his opposition to tax increase in his final state-of-the-state address.
Update, Oct. 4: Tijuana Business Cooperation Council leader Juan Manuel Hernández Niebla blasts local PRI state legislators, other than Carmen López Segura, for not fighting the value-added tax increase for border states; new Baja California PRI congressional leader Chris López said this week he was backing the administration's proposal. Story, El Mexicano (PDF). Jump.

U-T San Diego overview of value-added tax proposal, and maquiladora goods import tax: U-T San Diego's Sandra Dibble has an excellent overview of the value-added tax debate and a separate proposal for Mexico to collect taxes from maquiladoras for goods that enter the country to be assembled and re-exported. After the goods leave the country again, the tax is to be refunded; the measure is designed to prevent fraud, but business leaders fear that the mere fact of having to pony up the tax money in the first place, even if it will be refunded, will curtail maquila operations and business at the border.


Value added tax = Impuesto de Valor Agregado (IVA)