Mexico’s informal economy: growing way too big?
Mexico's informal economy keeps growing and growing, but what's in it for me? (Mexico City's Tepito District)
This is another of those posts that’s generated from the translator’s desk. I can’t give you too much information but this is along the lines of what I’ve been working on:
The informal economy in Mexico has now reached 19 MILLION people. That means – if you believe it – that there are 45.7 million economically active humans in Mexico. Some LARGE percentage – close to half – of them work in the informal economy. I ask the question if you believe the numbers because I think that more than that number would like to be working. And many of them will enter into the informal economy simply as a practical economic fact – that’s where the jobs are.
In any case - try to imagine 19 million people working on the streets across Mexico: selling comida, music and movies, used or stolen clothes, personal care goods and cosmetics, and the list goes on and on. There are very few things you cannot get in Mexico’s informal economy.
For many of us – it’s a great deal. We get goods that are cheaper because they are not taxed. There’s literally no markup. But I actually just translated a proposal on fiscal reform and the bottom line: these 19 million people need to pay TAXES. Those of us who do pay taxes because we are in the system are being overburdened (screwed) and the Congress is getting ready to stick it to us even more.
Look, I like the guy who sells me fresh squeezed orange juice in the morning. He isn’t paying for the light or the space he occupies on the street and he sure as hell isn’t paying taxes. Mexico has one of the lowest tax recovery incomes in Latin America. But let’s not abolish all these unique entrepeneurs. 100 pesos a month into the tax coffers from each of them would go a long, long way! I do hope the proposed legislation can bring more of them into the tax-paying fold.
It’s not the only problem that the forthcoming fiscal reform proposal addresses. Many companies make FALSE claims to exemptions, which means that they too are paying NO taxes. We probably have a good idea of who those companies are – so the reform lets Mexico’s SAT go ahead and do their job. This is going to be a real firestorm in some political quarters.
This little translating job woke me up to some scary facts about the Mexican economy. I’ll post some more based on my next job.
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