Echoes of the tax reform affect the Border

Opinions rise regarding Peña Nieto's Proposal

In the next few weeks, senators and congressmen will debate the approval of this Tax reform. What is their position on this? So far Senator Ernesto Ruffo, President of the commission of Border Affairs in the Senate, has already publicly opposed this measure, and several border legislators of different political parties are behind him on this.

Juan Manuel Gastelum, congressman for the 5th district (representing the region of Baja California), manifested his opposition to the tax reform as well through the social networks: "Let it be known: I publicly invite and exhort ALL CONGRESSMEN OF THE NORTHERN BORDER, this means EVERY POLITICAL PARTY, without distinction, TO JOIN ME in a common front, to convince the President that THE REFORM HE'S PROPOSING IS NOT WHAT'S BEST FOR ALL OF THE BORDER, that it will not generate more jobs, it will not create unity, it will not create a higher income. In the content of the reform there is no explanation, of how much will actually be collected, even if we are being told there are difference between the border and the rest of the country, anyway, it is the same rhetoric. We should not allow this "forewarned coup", let us look after the interests of our nation that even if it is the northern border, it is Mexico!!! WHAT DO YOU SAY??? HELP ME START THIS UNION!!! It's for BAJA CALIFORNIA, it's for our children, it's for Mexico!!!!!"

It has also been informed that Senators from the Political party PAN have openly and formally manifested against the tax increase in the Border.

Martin Diaz de Leon, Legal adviser to the Business Council of Baja California, also pointed out the effects the tax reform would have on the border in the even that it be approved:

-The first major effect would be the loss of 60,000 jobs in the first year, and up to 100,000 jobs in a 3 year period

- The loss of 2% to 2.5% of the Gross Domestic Product

-The loss of purchasing power

-Generation of a second recession (the effects of the one in 2009 have yet to fully sink in) affecting the GDP for at least 5 years, given that people would be spending a lot less and overall salaries would lose purchasing power across the border.

-It would greatly affect those with lower incomes

-By not taking into account the exchange rate of Pesos/Dollars the inflationary differential would make products much more expensive and make dollars lower in price.

-It will increase border crossing because consumers will want to take advantage of the lower prices in the United States

-The net loss of $6 Million dollars during the first year.

-Loss of market competition

-The VAT at a rate of 16% would be 100% higher than that in California

For someone who doesn't live or trade in the border with the United States, it is not easy to understand and they may even ask themselves why those in the border are complaining that Enrique Peña Nieto wants to apply the same tax percentage as the rest of the country.

Martin Diaz explained this: "Imagine that on the next block, there is a very beautiful park, with a modern shopping mall, with air conditioning even in the bathroom, clothes, food, electronics, and entertainment up to 50% cheaper or more in some places, ample free parking, as a consumer you only pay 8% VAT, if you're a business owner and happen to live on that first world block, you will be able to rely on preferential loans so you can buy merchandise, so you can build and have the equipment necessary to operate, paying only a 4% to 6% annual interest, with a time span of up to 30 years in which to pay the loan in comfortable monthly payments. OK, that would be the United States. With that information at hand, if you lived on that block of Mexico, I would ask you, where would you shop so you can get the most for your money?, If you were a business owner, How would you be able to compete with those on the next block over? How would you hold on to a consumer if your product is more expensive and has a VAT higher than that of any other business owner that is only a few steps over? And if you're a wage earner and suddenly your salary would afford you less when you have a higher VAT for the same product, which block would you shop on? And what if you don't have a passport? How will you manage?"

One way of showing your discontent or agreement with the tax reform is contacting your state representative, senator or congressman, if you're interested in letting your opinion be heard, this links will be of great use to you:

This map will help you locate your congressman by state

Here you will be able to get to know the members of Senate as well as their contact information

Brenda.Colon@sandiegored.com

Daniel.Aguilar@sandiegored.com

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