Sunday, February 27, 2011

Peña Nieto the Tax-Cutter

A shrewd move from Enrique Peña Nieto:
The governor of the State of Mexico, Enrique Peña Nieto, announced that starting in 2012 the tenencia payment in the state will be eliminated and that the federal government will be in charge of establishing the mechanisms for its elimination and compensating the revenue for this tax.
Tenencia, it may be worth reminding readers, is essentially a car tax of several hundred dollars per year, depending on the make and model. You may remember that Calderón eliminated the tenencia for newer cars last year. It was not a popular tax, but it is a significant source of state government cash, even after Calderón's declaration. Maneuvers like Peña Nieto's often get denounced as electorally motivated in Mexico, which always strikes me as kind of stupid, because of course it is! They're democratic politicians; virtually everything they do is motivated by elections. However, this is a pretty egregious example, because Peña Nieto will enjoy the fruit of the plan, as his popularity will probably get a bump ahead of the elections this summer and in 2012, as the plan goes into effect, yet when the bills come due and programs have to be cut or revenues increased elsewhere, it won't be his problem.

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