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Latino Daily News

Saturday August 23, 2014

Mexico’s Supreme Court Upholds Sales Tax Increase in Border States

Mexico’s Supreme Court Upholds Sales Tax Increase in Border States

Photo: Mexican Supreme Court

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Mexico’s Supreme Court has upheld a law that raised the sales-tax rate in border states from 11 percent to 16 percent to bring it in line with the rest of the country.

That measure was part of a broader 2013 tax overhaul.

By a vote of 9-1, the high court ruled against a challenge on constitutional grounds brought by lawmakers with the conservative PAN party and some legislators with the leftist PRD party against the measure, which abolished a preferential value-added tax rate regime for border areas that had been in effect since 1995.

Justice Juan Ramon Cossio said the law making VAT-tax rates uniform across Mexico does not violate the principle of tax fairness.

One of his colleagues, Justice Arturo Zaldivar Lelo de Larrea, said it was not the function of the court to analyze Congress’ motives in passing the measure but only to determine whether or not it violates the constitution, adding that, in his judgment, it does not.

In a statement, the PAN’s leadership in the lower house said it regretted the Supreme Court’s ruling and urged the federal government to rectify the “regressive” tax overhaul package.

The party will continue to push for economic improvements for those Mexicans who have “seen their quality of life diminished,” the PAN’s Jose Isabel Trejo said.

The Finance Secretariat said last year that consumers were not benefiting from the lower sales-tax rate in the border states and that the regime only translated into higher profits for companies.

It said, therefore, that it favored raising the rate to the same level as elsewhere in Mexico while also undertaking actions to avoid abusive price hikes.

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