Higher taxes are good for Mexico

Dan Grech Sep 17, 2007


Scott Jagow: The last thing most businesses want is higher taxes. But in Mexico, companies are saying, “Bring them on.”

Mexico’s Congress is expected to finally revamp its tax code this week. And investors can hardly wait. Dan Grech reports from our America’s Desk at WLRN.

Dan Grech: Mexico’s tax overhaul could increase annual collections by up to 3 percent of GDP. That’s more than $30 billion a year.

You might expect free marketeers to frown on higher taxes. But Eric Farnsworth with the Council of the Americas, a pro-trade business group, supports the long-delayed reform.

Eric Farnsworth: To compete on a level playing field, it’s absolutely critical to have a tax system that’s fair and that works.

He says the problem in Mexico has been some politically connected firms were getting off cheap.

Farnsworth: It’s a matter of fairness. But it’s also a matter of long-term planning. So long as the tax system’s fair and open and transparent, decisions can be made based on economic issues.

That means a new tax system will not only bring in more revenue, it could attract new investment.

Global investors who shied away from Mexico’s political patronage may now be willing to place a bet on the country.

I’m Dan Grech for Marketplace.

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