Mexico is a country that has a chronic confrontation with success. We prefer to live in victimization believing merely surviving is often the simplest option. If we add to that our ancestral taste for paternalism (First with the pre-hispanic emperor, then the Spanish vice-king, then the military leader and finally the civil president), the history of Mexico seems like a great chronological log of a country destined for greatness and only manages to get great failures.
Training in the Shadows.
The reality of our country and the short time we've had with Enrique Peña Nieto's time in office is not flattering at all. Nothing is left of the expectations of “Mexico's time to shine” which was spoken of so highly in national and international media since December of last year, when Peña Nieto became president. For a lot of people, the conditions were perfect for Mexico to reach it's full potential, a series of reforms would be approved that would boost Mexico's economy. The country and it's upcoming progress were a trendy topic, and we were built up and taken care of just like “Canelo” was until his fight against Mayweather. His boxing career was also on a fast track to greatness, but fell apart once he faced the North American champion in a head on fight.
However, regardless of how much drive there was, as well as how much the political party PRI and Peña Nieto proved themselves as the young champions that would defeat the harsh reality inherited by Felipe Calderon's presidential term, and the results of an economic world crisis in 2008, the truth is that it was not enough to have a project that would “Move Mexico”, but rather it was needed to give it actual substance.
Round 1: a New Champion
The initiative for a new Tax Reform was presented by Peña Nieto this past September the 1st, it's very true that very few people are convinced of that it will do any good, except the President and his secretary of treasury, Luis Videgaray, who has called himself as a the great “economic technician” y the mastermind behind the regime. The initiative doesn't really seem to be designed to fix the current economic reality, but somehow focuses on every region.
It's not just about raising taxes, what President Peña Nieto should be doing, is talking to Mexico's society about what it is he actually wants to accomplish.
The tax reform initiative has no plans for redistribution of wealth, nor does it promote economy, but it is however, centrist and populist. It seems to be designed so that senators and congressmen from the political party PRD would gladly approve it, in exchange for the support to approve the energy reform, proof of this is how static Jesus Zambrano and Jesus Ortega, both leaders of PRD, were on their twitter accounts.
Round 12: Defeat is a reality
At a local level things do not look good either. According to an analysis elaborated by the Mexicali school of accountants, along with information provided by INEGI and Coneval, the unemployment rate in June 2013 is 5.3%, placing itself high above the historic average of 2%. In the same study, they noted that 305,507 people in Baja California are working on informal economical activities, of which 49% are in Tijuana.
If the tax reform that President Peña Nieto presented gets approved, the affects on the border would be highly negative. First of all, it would cause an enormous impact directly on the purchasing power of all the consumers in the border who will face a 5% tax increase (a 16% total) in their shopping in Mexico, which will surely compensate by crossing the border to purchase their goods in the United States, which will cause many local businesses to shut down.
Isn't anyone in the department of treasury in Mexico aware that California’s tax is 7.5%? are they not aware the effects of raising the tax on the border to 16% will have?
Dying suddenly at the border, with just a 16% tax
Let us hope that the search for greatness Peña Nieto is embarking on doesn't get knocked out by reality and the nearsightedness of his economic-political team, which seems to have a lack of understanding about the social reality the country is facing right now. As a last example of the true spirit of Peña Nieto's Tax reform has, according to The Economist in it's section “It's a dog's life”: “If you add VAT to dog's food and not ordinary food, some pet owners may evaluate buying steaks for their pets instead”
Let us hope that the rest of Mexico doesn't get knocked out when we face reality. The disillusion will be worse if Peña Nieto fails and Mexico dies of nothing. Yes... of Nothing.