Mexico Tax Reforms Won't Apply to Most Workers Dale Quinn - Quartz
go to original September 19, 2013

Mexico's informal economy creates jobs but lacks security (CCTV/BizAsiaAmerica)

Recently proposed fiscal reform in Mexico does nothing to rein in the country’s massive shadow economy, despite optimism among business leaders that it would.

Still, in a country where buying and selling goods without government intervention is woven into the culture, regulating and collecting taxes from a vast array of often highly mobile vendors remains a daunting challenge.

On any given day in Mexico, peddlers set up shop on street sides and sell everything from tacos or fruit to hats, brooms and furniture. During weekends, tianguis—open-air markets crammed with clothing, crafts, and vegetables—bustle with activity. The products sold by such venders vary widely. But for the most part, these small, independently run businesses have something in common: they don’t pay taxes.

There’s been a lot of talk about taxes in Mexico over the past week. President Enrique Peña Nieto just introduced reform that would increase taxes on some, such as higher earners and those making money in the stock market. At the same, it would time strengthen programs to help the poor.

The plan has already drawn criticism for falling too heavily on the middle class. Left out of the reform were contentious sales taxes on food and medicine. Also, it does nothing to regulate and tax Mexico’s burgeoning informal sector, business leaders say.

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