More on the Tenencia

Courtesy of Macario Schettino:

Income from the tenencia for the federal government adds up to 21 billion pesos a year, five times more than the new car tax (ISAN). That's logical, given that it's a tax that is placed on all autos in circulation with less than ten years of use, which is about eight or nine times more than the number of cars sold each year. Furthermore, the states take advantage of the tenencia to tack on taxes for vehicular control, or services, which vary in each case, but which are not an insignificant sum.

Here is the problems of coordination: if the federal government eliminates the tenencia, are the state governments going to eliminate the right of vehicular control?

They can do so, but they will lose revenue that will not be easy to compensate. Additionally, there is a logic to the government charging for these rights, if with it they finance some indispensable services, such as pavement, stoplights, or even transit police.

Further still, the tenencia tax was totally distributable, in such a way that the federal government only raised that 21 billion pesos in revenue, but the ones who spent it were the state governments. During 2011, which is the year of advance notice for the end of the tenencia, which will in reality come to pass in 2012, the federal government is going to take those 21 million from the ISR [tax on corporate profits]...The following year, we don't know what's going to be done.