Monday, May 12, 2008

Taxes, Taxes, Taxes

You may wonder how we pay taxes in Mexico. I've probably touched on it a couple of times but like everywhere in the world, no one likes to pay them. Fortunately, we have a sytem very similar to the U.S. and Canada. As an individual who works for himself, I pay my taxes monthly. My taxes are filed electronically via internet. I could probably do them mysef, but I trust my accountant and he looks out for me. No funny business there. I am allowed to take the usual business expenses; gasoline, car maintenance, office supplies, a portion of the house utilities for the room I use as my office, travel expenses, etc. In most cases, the average tax on middle income salaries is around 25%. We pay 15% sales tax or IVA, tenencia, which is a tax on cars. Apart from paying the tags, the first nine years of owning a new car you pay a yearly decreasing tax based on the type and value of the car. After the ninth year, you only pay the tags. This year, Patty reached her tenth year and all I paid was 300 pesos. Last year I had to pay 1680 pesos. So it is great for me to hang on to the Pathfinder. The car with the least tenencia is a pickup as we still use the rule established long ago as pickups were mostly used in rural areas. The tenencia was originally started in 1967 to fund the Olympics here in Mexico. Just like the half cent sales tax to build the Alamo Dome in San Antonio, the tax was never eliminated after its original use.
One saving grace here is the property tax. I tell my Mexican friends when they brag about how nice everything looks in the U.S., that property taxes are a zillion times higher there then here in Mexico. How much? This year I paid less than 3000 pesos. If this house were in San Antonio at the same appraised value, the property tax would fall a little over 9000 dollars. So you can see the disparity there.
Our utilities have sales tax attached to them too. Regular land line phone service is 15 dollars, and the DSL line for the internet is 32 dollars. Again, the 15% sales tax is applied. In Mexico there is no state sales tax or state income tax.
A real killer for me was the import tax we paid on the travel trailer. Import on the trailer was 22% so now that might explain why we have an 18ft TT instead of the 33ft Trailmanor we used to have. As a permenant resident, I can't have vehicles with plates from the states. Also, I can only import new vehicles not used so another reason why the tax is so high.
Overall, I know I pay less tax here than I did in the states. Sure, there are lots of people who don't pay any tax. If you earn less than 4000 pesos a month, you pay no income tax. Well, how many Mexicans fall into that category plus all the people with informal businesses. People who sell things on the streets, rolling markets, etc.
Hey, you get what you pay for. I follow the book when it comes to the rules and it hasn't hurt me yet. In fact, the system works great, it might be slow at times but it works.
Today I have a couple of people coming to look at the house. The guy who is coming at 6 asked if the price was negociable. I replied, "como de todo".

Have a great day and most of all keep smiling. A smile is worth a million dollars or pesos, or yen, or francs, or . . . . . . .

HEB Opens 30th Supermarket In Mexico
This is really big news. HEB has opened over 3o stores here in Mexico. Why do we like HEB? HEB brought competition to Mexico and now competes with Soriana (which recently bought up Gigante stores), Comercial Mexicana and Mode. This is good because the competition had to improve their stores, produce and prices.

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