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... prior. Beverage Companies: Bottlers that make syrups for soft drink dispensers will have to pay a 20 percent production tax if they use corn sweeteners. The 10 percent tax on soft drinks would apply mainly to drinks made with high fructose corn syrup, a sweetener imported from the United States and which competes with Mexico's struggling sugar industry. Only drinks made with sugar cane would be exempt from the new tax. The tax on using corn sweeteners may encourage beverage producers to use Mexican-grown sugar cane as their main raw material.
I (we) know that sugar cane, besides being subsidized, is more expensive than higher fructose, so even if bottlers decide not to use corn sweeteners to avoid paying more taxes; they will find their operating margins reduced anyway when they spend more on sugar cane. The Mexican Stock markets reaction: As we can see, from the information below, the approval of the new tax code is reflected by negative flows in the stock exchange (let us note that the overall behaviour of the stock market reflected a loss of 1. 5 percent that same day): Telephone companies and wireless service providers Telfonos de Mexico, the country's largest telephone company, slipped 2. 6 percent to 15. 92 pesos. Wireless firm America Movil fell 1. 6 percent to 8. 82 pesos. Grupo Iusacell, the country's second-largest cellular phone company fell 5. 1 percent to 3. 56 pesos.
Soft drink and beer companies: Shares of Coca-Cola Femsa dropped 2. 5 percent to 18. 4 pesos. Shares of Pepsi- Games, Mexico's largest Pepsi-Cola bottler, closed unchanged at 10. 1 pesos. Shares of Grupo Modelo, Mexico's largest beer maker, fell 4 percent, to 9. 7 pesos. Shares of Fomento Economic Mexicano, the second-largest beer maker in Mexico and the parent company of the soft-drink bottler Coca-Cola Femsa, fell 2. 8 percent to 31. 5 pesos. The Taxpayers reaction: Infuriated taxpayers have flooded the offices of the judicial branch of Hacienda with injunction applications. During January Hacienda employees expected to receive up to 300 thousand amparo's [Talamantes 2002 ], promoted by physical and moral persons demanding the derogation of the absurd fiscal dispositions, which will certainly smother, in my opinion, the bureaucratic machinery of federal courts.
Business chambers and associations from the different affected sectors are advising their members to seek a legal injunction (amparo) against the new code. Companies such as Arabia Corn, Archer Daniels Midland Company and Cargill Inc made public their decision to present a complaint before the World Trade Organization in order to protect themselves from the new taxes [Menjido 2002 ]. Oddities and Contradictions of the New Tax Code: The lack of care manifested by Mxico's legislative body not only stroke the most representative sectors of the countrys economy, but also created confusion on how these new laws would be applied and shaped fiscal paradoxes: In a country where anyone can buy a pre-paid mobile phone, incoming minutes are free, and only a limited sector of the population can have access to regular phone lines; cellular phones are considered luxurious under the new law. 19 million cellular phone lines are estimated to be active in Mexico and, definitely, the wealthy people in Mexico does not account for 19 million inhabitants (nearly 20 percent of Mexico's residents! ). Under the new tax code a pair of rough steel toe boots worth approximately $ 20 (in fact any kind of boot that covers the ankle) is considered a luxury and should be taxed at 20 percent; nevertheless a pair of crocodile shoes worth over $ 200 is not, and should be taxed at only 15 percent. To practice nautical sports or to play golf are luxuries paying 20 percent in taxes; to buy golf clubs or a march is charged with regular taxes. To buy salmon (in Mexico it is usually cheaper than red snapper or tuna) is a luxury; however, to buy Italian prosciutto, at $ 25 a pound, is not.
Perfumes, which may include any $ 2 scented face cream, are luxurious goods; to buy a $ 200 Mont Blanc pen is not considered a luxury. Tin camping plates are a luxury, handmade chinaware is not. Conclusions: In Mexico we have a fiscal reformation that instead of helping us is getting on our way Eugenio Clariond, CEO of Grupo IMSA Mexico's top steel producer- [Clariond 2002 ]. It is understood that the Mexican government is in need of more resources in order to meet the peoples necessities; nevertheless I disagree on the way congress pretends to obtain funds. Tax collection should avoid causing business utilities to fall by means of legal instruments; in fact, it must aim to increase those utilities; consequently when taxes are applied the amount of money collected will also increase. I think that a countrys tributary system should not be based mostly on income; for it has proven to be unfair in a country like Mexico were informal economy is a serious problem.
Those who actually fulfil their duties paying their taxes, instead of being relieved, will have to bear a heavier burden paying even more, while those who have never paid any kind of income tax (which are estimated to be more than half of the economic sector) will continue to enjoy their self-appointed tax exemptions. Mexican taxpayers were, before the new law application, already overwhelmed by taxes. If you buy a new car in Mexico you will have to pay 2 different taxes: The sales tax (only once) and the New Car Ownership tax (once a year until the cars model is ten years old), along with the annual license and registration fee. In our Juarez-El Paso community is ordinary to find Juarez residents waiting, up to 2 hours sometimes, on the international bridges just to be able to buy gasoline... Why?
Because, even when Mexico is referred to as one of the worlds largest oil producers ranked 13 -, fuel prices increase at a monthly rate (its true! ) thanks to taxes, setting fuel prices in Mexico to almost twice the U. S. price. I believe that instead of creating new taxes to increase the governments budget; lawmakers should create a system that would force tax-evaders to pay; that is a system that would evenly spread fiscal obligations over Mxico's workforce, therefore increasing the governments budget, and at the same time alleviate the load on taxpayers. The best way to reduce tax evasion is, in my opinion, to tax consumption instead of income. Like that the number of taxpayers would automatically increase (even tax-evaders would have to pay, willingly or not! ); budget expenditures would decrease since such taxes are easier to collect, and income tax payers contributions would be less onerous.
President Fox's proposal was extremist in the sense of taxing all kinds of foods, books and medications; I think that this tax issue should have aimed to create an adequate balance turning around the reduction of direct taxes (income) and the increment of indirect taxes (consumption). References: Becker, Gary. Critica Premio New Impuestos Especiales, Palabra, January 19 2002, Section A. Ceres, Jorge. Ineficiente la Reforma Fiscal, Crnica, January 9 2002, Finanzas. Christman, John H.
Impact la Reforma a Maquilas, El Norte, January 25 2002, Negocios. Clariond, Eugenio. Entrevista, El Norte, March 10 2002, Negocios. Garden, Maria. La Reforma Fiscal en Alimentos y Besides, Reforma, March 17 2002, Buenamesa. Mexico, Manuel.
Los Empresarios Impulsan una Contrarreforma Fiscal, El Sol de Mexico, January 12 2002, Alto Poder. Talamantes, Armando. Prev Hasta 300 Mil Amparos por Reforma, El Norte, February 4 2002, Negocios. Unit Nacional de Trabajadores, Impact de la Reforma Tributaria, 2002, web
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Research essay sample on Analysis Of Mexico New Tax System
