World Economy

Mexico to Cut VAT in Region Bordering US

Mexico to Cut VAT in Region Bordering USMexico to Cut VAT in Region Bordering US

Mexico’s next government will press ahead with president-elect Andres Manuel Lopez Obrador’s plan to cut the value added tax rate in a strip along the US border, probably to 8% from 16% now, a top aide said on Friday, Reuters reported. Lopez Obrador, who takes office on Dec. 1, hopes such measures could improve ties with the United States by reining in illegal migration, which has been a major bone of contention between Mexico and US President Donald Trump. The strip would be about 30 km wide so as to include major border cities such as Tijuana, Mexicali, Ciudad Juarez and Reynosa, said Carlos Urzua, the finance minister-designate. “We’re going to have VAT of probably 8% in this free zone, and only there,” Urzua told a news conference. The VAT cut was among a series of measures Lopez Obrador proposed during the election campaign, aiming to boost the economy of the border region in order to stem the flow of migration north. Urzua said the 2019 budget, which he must negotiate with the outgoing administration of President Enrique Pena Nieto, would be presented to congress on Sept. 15.

Add new comment

Read our comment policy before posting your viewpoints