A 5% tax on remittances would reshape the market for these shipments: IMEF
The 5% tax on remittances sent from the United States , which the U.S. Congress intends to approve, "will reshape the remittance market that has developed in the United States," forcing migrants to send money through other means such as cryptocurrencies, which would increase the costs and risks of these transfers.
This was confirmed by Gabriela Gutiérrez, national president of the Mexican Institute of Finance Executives ( IMEF ), who also highlighted that several communities in our country depend on remittances for their livelihoods, so these localities would be the ones most affected if the tax is approved.
"Several communities that receive these funds depend on them for their livelihoods. Remittances represent 24% of El Salvador's GDP and more than 3% of that of India and Mexico," Gutiérrez said.
Furthermore, citing data from the Center for Latin American Monetary Studies ( Cemla ), he recalled that remittances represent 10 to 14% of the state GDP of Oaxaca, Zacatecas, Michoacán, Guerrero, and Chiapas.
Therefore, he said, it is very likely that if the initiative is approved, remittances would continue to be sent through alternative, non-traditional channels such as encomenderos (encomienda) or cryptocurrencies, which would increase the costs and risks of these transfers.
"It's also very possible that the volume of remittances sent from the United States will decrease in the coming months due to the persecution of illegal immigrants. This would significantly affect the local economies of several states in the country, as remittances are the primary source of income that stimulates consumption," Gutiérrez said.
For his part, Víctor Herrera, president of the National Committee for Economic Studies at the Mexican Institute of Economics and Finance (IMEF), emphasized that remittances represent only 3% of the country's Gross Domestic Product (GDP), so there would be no "substantial impact on Mexico's overall economy."
"But there are also certain states and municipalities that depend heavily on remittances for their local economies," as is the case of Fresnillo, Zacatecas, explained the president of the National Committee for Economic Studies of the Mexican Imef (IMEF).
"It won't have a substantial impact on the national economy," but it could have a significant impact on some localities that rely heavily on remittances.
On Sunday, the Republican Party's bill proposing a 5% tax on remittances was approved by the House Budget Committee. This bill could be approved by the House of Representatives later this week.
The ambitious tax cuts and social spending reforms, known as the "One Big Beautiful Bill," would expand Trump's 2017 tax cuts, reduce taxes on some tips and overtime earnings, increase defense spending, and provide more funding for his border and immigration crackdown.
Ramsés Pech, an economic advisor, considered that the remittance tax, which is expected to be approved by the U.S. Congress and is expected to take effect on December 31 of this year, "has broad legal and economic viability within its sovereignty."
He explained that the 5% tax on remittances is a special rate applied to remittance services, and not a tax on workers' wages. Therefore, the U.S. government could argue that there is no double taxation and that no treaty between the two countries is being violated, as federal government officials in Mexico have claimed.
Eleconomista
