Ask an old gringo about Mexico taxes, cars, health, welfare and vacations

articles Living, Working, Retiring

Marvin West

Street scene in Sayulita, a beach town on the Mexican Pacific coast © Christina Stobbs, 2012
Street scene in Sayulita, a beach town on the Mexican Pacific coast © Christina Stobbs, 2012

Question: It is income tax time in the United States. How are taxes in Mexico?

Answer: It depends on who you ask. I think property taxes are ridiculously low but services are a close match. I thought the annual tax on my Volkswagen was disproportionately high but the bug is now 14 years old and taxes are no longer an issue.

If our modest investments experience a profit, it is taxed gently.

When we sell our home, we take a hit for capital gains, even if there is a loss. No kidding.

Mexico has an income tax but many do not pay — because they work “off the books.” The informal labor force is paid in cash. The government does not get a cut.

Mexico has something called “value added tax” on retail sales — 16 percent. It does not apply to food or medicine.

As a foreigner, I am not permitted to get involved in Mexican politics — so I won’t. But I can report that President Enrique Peña Nieto says there is not enough tax revenue to do all the things he wants to do for Mexico.

His advisors have floated a trial balloon about extending the sales tax to no-no land, food and medicine. Critics say that would fall too heavily on the poor, about half the population the way I figure it.

PRI lawmakers, the prevailing party, tried to paint a happy face on the tax idea by saying they would give back most of the increase in other programs for the poor. That did not stop the debate.

This reform is in the “later” category or not at all.

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Question: I received a second or third-hand report from Puerto Escondido about a family of four on a motor scooter stopped at a red light. The baby of the group tumbled into the street, bounced once and landed behind a car stopped beside the scooter.

The mother retrieved the little one before the light changed and away they all went, zoom, zoom. Do you believe this tale?

Answer: Yes. You should see the crowds that travel our bumpy street, stacked on one bicycle, handlebars to back fender, riding in layers on one ATV or sardined in the back of a pickup truck, standing room only.

Authorities occasionally ticket gringos for not wearing seat belts. Mexicans? Not so often.

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Question: What is the relationship between the public and the police?

Answer: There are Mexicans who believe the police are as bad as the criminals or maybe worse. Many crimes are not reported for fear pain or loss will increase. Victims expect no assistance and only hope to avoid being officially involved.

There are different views.

Twenty police officers from the state of Jalisco were assigned to the Lake Chapala area for the Easter season to discourage the bad guys and protect holiday visitors from each other.

Because the officers weren’t in anybody’s budget, lakeside people provided free lodging, home-cooked meals and maybe a few tips on likely sin scenes.

The relationship was so good, the officers so helpful, local residents have requested a permanent state police outpost.

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Question: What are you hearing about health and welfare in Mexico?

Answer: Too much and not enough. More than 10 million Mexicans, around 9 percent of the population, have diabetes. A decade or so ago, half that many were afflicted. The shocking increase represents “a true health emergency,” says Mercedes Juan Lopez, Mexican minister for health.

Blame is scattered all around. One suspect is a genetic predisposition toward diabetes. Another is poor eating habits. Another is city sedentary lifestyle. Being fat is a factor and some 70 percent of all Mexicans are accused of being overweight. Before you ask, Americans are worse.

As for welfare, the president pushed the idea of lowering age eligibility from 70 to 65 for a modest pension program for those who have no other income.

The expansion adds about 2.5 million people to the approximately 5.6 million already receiving benefits and raises the monthly allowance 25 pesos to 525. That’s about $42, not much unless you have nothing.

There is need. Some of the money that once flowed from Mexicans working in the United States has dried up.

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Question: True or false? Mexico is big in building cars.

Answer: Ninth in the world and growing, 2.88 million made-in-Mexico cars last year, fourth or fifth in exports. One of every nine sold in the United States rolled north across the border.

Volkswagen, Nissan, General Motors, Ford, Honda, Dodge, Toyota and other automakers are heavily invested in Mexico. VW says its plants in Puebla employ 14,000.

There are some interesting tidbits:

Fiat is building model 500s at its new plant in Toluca and some are being sold in China, of all places.

Vehicle assembly plants provide thousands of jobs. More than 400,000 are employed in auto parts manufacturing.

Exporting cars brings about $85 billion USD into the Mexican economy. Give that some thought.

There are two explanations for this growing success story: Serious workers like what they are doing and build quality products. Wages, high by Mexico standards, are low compared to Detroit or even Chattanooga, Tennessee.

Mexico assembly-line workers make about $40 a day, according to the Wall Street Journal. The new VW plant in Chattanooga is paying $120 a day, less than half the Detroit haul.

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Question: IBM is moving some more jobs to Guadalajara. One of the union reps left behind said the buildings don’t even have heat and air conditioning. Could this be true?

Answer: Yes. It is not uncommon. Our home on Lake Chapala has neither. I didn’t know we needed it.

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Question: A year or three ago, you told us big bread company Bimbo had married Sara Lee in the U.S. Are they getting along well together?

Answer: Not as good as expected. Mexico Bimbo, the world’s largest breadmaker, is still recovering from a very bad ending to 2012. Profits declined by 81 percent compared to the fourth quarter of 2011. Company net proceeds were only 176.19 million pesos.

Sara Lee expenses were higher than anticipated. Brazil was a pain, too. It didn’t eat all the cookies the company shipped.

Bimbo said “Viva Mexico” as in no complaints with us home folk.

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Question: Where do you go for vacation when you live your life on vacation?

Answer: That is a misleading implication. Retirement in Mexico is fun and we are grateful. Winter weather is wonderful where we live. Flowers bloom. Strawberries are inexpensive and very tasty. And the mangoes, oh my.

Alas, every day is not a perfect holiday. This is not even a full-time vacation. Once a month, I write a column for Mexconnect. Once or twice each December, January, February and March we drive three hours to a Pacific beach for a week or so of vigorous sun, sand and surf training.

We must travel under somewhat crowded conditions if we invite too many guests.

Life can be more challenging than you realize. We recently had to wait in line at the ice cream shop.

We often do strenuous day trips, driving and even walking, just to see what we can see. We tell you about some of those adventures. Some we save for our forthcoming book. Needless to say, we risk life and limb going to big cities (you may recall what I think about Mexico City).

We enjoy Mexico but it is not a complete lark. An old man with almost no hair is at risk. He could suffer sunburn.

Published or Updated on: April 12, 2013 by Marvin West © 2013
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