Lawmakers Call for VAT Cuts in Mexico Border States Mike Godfrey - Tax-News.com
go to original October 15, 2014

57 opposition party senators have called for a return to the 11 percent rate of value-added tax (VAT) in Mexican border states.

The proposal was launched by representatives from Mexican state Baja California, which was said to have been hit heavily by the introduction of a 16 percent rate, now in place in all of Mexico. North of the border, US states generally levy single-digit sales tax rates.

The rate of VAT in border states was lifted as part of the VAT reform measures approved in 2013.

According to the petition, 573 stores closed in Baja California, and there was a 33 percent increase in cars travelling to California to buy goods and services subject to lower tax rates. The state's economy contracted by 1.6 percent during the first quarter of 2014, immediately after the change.

Mexico's lower house of Parliament must approve fiscal plans for next year by October 20, 2014.

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