Mexico Businesses Threaten to Stop Paying All Taxes Over Covid19
President Andres Manuel Lopez Obrador refused to promise fiscal aid to companies affected by Covid19 shutdowns. Instead, the president focused his economic response on aid programs to the poor and small businesses loans.
A Tax Revolt Threat followed.
Mexico’s president is facing threats from some state business chambers to withhold taxes to protest the government’s refusal to provide aid to offset the impact of the lockdown, Reforma reported on Sunday.
Business chambers in the states of Tamaulipas, Durango and the beach resort of Acapulco are demanding tax deferrals, Reforma said. Mauricio Olguin, who leads Durango’s Conaco group, said his 18,000 members would stop paying all their taxes if the government didn’t provide breaks during 2020.
The protests by business groups follow complaints by governors from the states of Nuevo Leon, Tamaulipas, Coahuila and Jalisco, who claim their states’ economic activity accounts for a bigger share of federal tax revenue than they get back from government transfers.
Jalisco Governor Enrique Alfaro threatened to pull out of an agreement to provide tax revenue if the concerns of businesses were not heeded, daily El Universal reported on Saturday.
What's Mexico to Do?
How about, free money for everybody?
But what would that do to the Mexican Peso?
This setup explains why Mexico would not agree to the oil cuts demanded by Saudi Arabia in the oil deal just reached.
For discussion, please see After Years of Bickering a Meaningless OPEC Deal Reached
Lost in the Art of the Deal is the fact that the US is cutting more than its fair share.
Regardless, I strongly question if 10 million barrels is even enough to do much more than stabilize the price at some low level.
Mike "Mish" Shedlock