Mexican Taxing and Spending

Mexico, in recent years, has featured one of the smallest federal governments in the world. In addition to being notable for its relatively small size, Mexico also derived a bigger piece of its federal taxes from “consumption taxes” (a national sales tax) than income taxes.

January 1, 2014, the federal Mexican government made some adjustments in tax law… they increased the national sales tax (to 16%) and decreased a handful of other taxes…  they created their first ever capital gains tax… several other measures.

As a result, the Mexican federal government has new income. Yesterday, President Nieto announced what he plans for the federal government to do with this new funding – massive transportation improvements, including a replacement for the world’s busiest airport (Mexico City), increasing capacity of the rail and road system, and doubling the capacity of Mexican ports to receive and ship cargo.

Mexico moved away from trade isolationism enforced by tariffs to actively engaging with world commerce about 30 years ago. Here’s a comprehensive look at the changing face of commercial competition along the Pacific coast from five years ago.

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