Boost com­ing?

San Luis R.C. awaits ben­e­fits of fis­cal stim­u­lus pol­icy


SAN LUIS RIO COLORADO, Son. — Res­i­dents here say an eco­nomic stim­u­lus pro­gram Mex­ico’s new pres­i­dent has launched in the bor­der cities has yet to have an ef­fect on their pock­et­books.

The fis­cal pack­age took ef­fect Jan. 1, slash­ing sales, in­come and busi­ness tax rates and plac­ing a ceil­ing on fuel prices at the pump.

Gov­ern­ment of­fi­cials and tax spe­cial­ists in San Luis Rio Colorado say the ben­e­fits of the new poli­cies only need time to be felt.

Un­der the pro­gram un­veiled late last year by Pres­i­dent An­dres Manuel Lopez Obrador, the value-added tax, or con­sumer sales tax, has been halved, from 16 to 8 per­cent in Mex­i­can bor­der cities.

In­come and busi­ness tax rates have been slashed from 30 to 20 per­cent for 43 mu­nic­i­pal­i­ties in the bor­der re­gion, in­clud­ing San Luis Rio Colorado.

The pack­age also is aimed at bring­ing gaso­line prices in line with those at the pump on the U.S. side, but res­i­dents of the San Luis Rio Colorado say they have yet to see much dif­fer­ence.

“I saw that prices were dif­fer­ent at the gaso­line sta­tions, but I don’t see that they have gone down that much,” said Norma Es­parza. “I don’t think that they have gone down to the same price as on the other side, and that was what was promised.”

Magna, the Mex­i­can equiv­a­lent of reg­u­lar gas, cost 14 pe­sos (73 cents) per liter at the be­gin­ning of last week, but ex­ceeded 15 pe­sos by Wed­nes­day — well above the prices for a com­pa­ra­ble amount of reg­u­lar sold in the Yuma area.

Estela Jimenez, in­ter­viewed as she was leav­ing a gro­cery store near down­town San Luis Rio Colorado, said she had yet to see a gen­er­al­ized re­duc­tion in prices for goods.

“I saw some prod­ucts that were cheaper than last year, but not all. Over­all I think that I bought nearly the same as I did the year be­fore with the same money.”

Small busi­ness own­ers such as Amalia Zalazar like­wise said prices largely are un­changed.

“In the case of gaso­line, I’ve no­ticed that they con­tinue giv­ing me the same amount for the same money,” she said. “I don’t see that this is sav­ing me money.”

And the re­duc­tion in the value-added tax, she added, has not af­fected the prices whole­salers charge her. In fact, she said, prices for some items, such as for some brands of re­fresh­ments, went up at the start of the year, mean­ing she could not pass along a re­duc­tion to her cus­tomers.

Raul Fuentes Ovando, an ac­coun­tant in San Luis Rio Colorado who spe­cial­izes in tax mat­ters, said the ben­e­fits of the stim­u­lus pack­age will take time to be felt on the bor­der.

“What is hap­pen­ing is that it is op­tional for busi­nesses to take ad­van­tage of the (value-added tax) stim­u­lus,” he said. “It’s not oblig­a­tory. They have to reg­is­ter for (the pro­gram) and it re­quires some ad­just­ments that take time.”

As more busi­nesses opt into the pro­gram, more con­sumers will see ben­e­fits, he said.

In 2014, the value-added tax for the bor­der re­gion jumped from 10 to 16 per­cent. This year’s re­duc­tion de­creed by Lopez Obrador is aimed at mak­ing stores in the Mex­i­can side more com­pet­i­tive with those on the U.S. side.

Fuentes Ovando be­lieves that the re­duc­tion in in­come and cor­po­rate tax rates can also help busi­nesses in the Mex­i­can bor­der cities grow and be­come more com­pet­i­tive.

None­the­less, “whether all those in­cen­tives are ef­fec­tive has a lot to do with do­mes­tic pro­duc­tiv­ity (in Mex­ico), be­cause they were de­signed with the idea of stan­dard­iz­ing taxes and prices with those in the United States.”

The min­i­mum wage for the bor­der re­gion also dou­bled at the start of the year to 176.72 pe­sos a day, or about 9.24 U.S. dol­lars at the cur­rent ex­change rate. But many busi­nesses in San Luis Rio Colorado al­ready have been pay­ing above the new rate.

“I be­lieve that there will be many ben­e­fits for that rea­son, but we have to be re­al­is­tic,” San Luis Rio Colorado Mayor San­tos Gon­za­lez said. “Al­most all the busi­nesses pay more than dou­ble the (new) min­i­mum wage rate.”

Like Fuentes Ovando, Gon­za­lez be­lieves that ben­e­fits of Lopez Obrador’s stim­u­lus pack­age will be felt over the long term.

He was par­tic­u­larly hope­ful about the re­duc­tion in busi­ness taxes. “Above all, I see it bring­ing about a greater abil­ity among (busi­nesses) to re­tain work­ers, which in the end ben­e­fits all of us with more em­ploy­ment and a bet­ter econ­omy.”


SHOP­PERS PASS THROUGH THE COM­MER­CIAL DISTRICT IN SAN LUIS Rio Colorado, where the Mex­i­can gov­ern­ment is try­ing to stim­u­late con­sumer sales through such poli­cies as a re­duc­tion in the sales tax rate on the bor­der.

MO­TORISTS IN SAN LUIS RIO COLORADO say not­with­stand­ing a fi­nan­cial in­cen­tive pack­age in­tro­duced in Mex­i­can bor­der cities, gas prices re­main higher than those on the U.S. side of the bor­der.

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