President Andres Manuel Lopez Obrador refused to promise fiscal aid to companies affected by Covid19 shutdowns. Instead, the president focused his economic response on aid programs to the poor and small businesses loans.
A Tax Revolt Threat followed.
Mexico’s president is facing threats from some state business chambers to withhold taxes to protest the government’s refusal to provide aid to offset the impact of the lockdown, Reforma reported on Sunday.
Business chambers in the states of Tamaulipas, Durango and the beach resort of Acapulco are demanding tax deferrals, Reforma said. Mauricio Olguin, who leads Durango’s Conaco group, said his 18,000 members would stop paying all their taxes if the government didn’t provide breaks during 2020.
The protests by business groups follow complaints by governors from the states of Nuevo Leon, Tamaulipas, Coahuila and Jalisco, who claim their states’ economic activity accounts for a bigger share of federal tax revenue than they get back from government transfers.
Jalisco Governor Enrique Alfaro threatened to pull out of an agreement to provide tax revenue if the concerns of businesses were not heeded, daily El Universal reported on Saturday.
What’s Mexico to Do?
How about, free money for everybody?
But what would that do to the Mexican Peso?
This setup explains why Mexico would not agree to the oil cuts demanded by Saudi Arabia in the oil deal just reached.
For discussion, please see After Years of Bickering a Meaningless OPEC Deal Reached
Lost in the Art of the Deal is the fact that the US is cutting more than its fair share.
Regardless, I strongly question if 10 million barrels is even enough to do much more than stabilize the price at some low level.
Mike “Mish” Shedlock
That is the common reaction, stop paying taxes because of the pandemic. https://highrisk.solutions/
While we’re at it, the FED can start funding counties and end property taxes. Exactly what are taxes when all this crap is contrived on a keyboard anyway? You give me some, then you want something back that’s bs anyway. Nothing more than control. Cant have the slaves get too far ahead. The idea the deficit is too big is certainly out the window.
How Much Does the U.S. Rely on Other Countries for Essential Medical Equipment? https://www.stlouisfed.org/on-the-economy/2020/april/us-rely-other-countries-essential-medical-equipment
I spent a good chunk of my year living in Mexico (work and pleasure) most of the time is in the Yucatan (both Merida and Cancun) and one thing that was often mentioned (in the region — which is governed by the non-AMLO pary) is that AMLO slowed the Cuvid-19 process to make sure that taxpayers would pay all their taxes by the end of March…
The reason is that the Yucatan has been in lockdown for nearly one month, with all restaurants, businesses, beach towns and beaches shut to everyone (including those who own a beach house there).
Again this is Mexico, and rumors are a way of the world there, still, AMLO only started taking Covid-19 seriously after March 31st…
The fundamental problem is that AMLO has a very classical view of the world (and little exposure to the rest of the world), he’s like a mini-Trump in his views — “Mexicans are strong and will not get Covid-19”, “those who take “time off” are lazy” and deserve what they get!
Its not hard to get these statements — AMLO has a “press conference” every morning where he goes of on tangents worthy of the “Two Ronnies” since these press conferences have a tendency to last for up to two hours.
He has always taken the view that its all in the best interest of the nation: Cutting all daycare (to zero), shutting down all women shelters, cutting all medication to public hospitals, cutting salaries to doctors in public hospitals. There are no stop gaps there are no solutions — ever! He believes that his “4th Transformation” is worth all the pain. So his view of the covid-19 is similar to that of Trump in the early days; “its a fix created by my enemies” seriously he’s said that on a number of occasions.
Anyway, aside from giving money away — since most Mexican production is for export markets, helping Mexican companies is probably not worth the effort since it’s their markets that have been decimated.
On the other hand, he doesn’t appear to want to help the people either.
It is truly amazing to see two North American countries behave so stupidly with grave consequences for their citizens. American has more than 25,000 dead so far (Canada with 1/10th of the population has 700) Mexico is not reporting deaths so no one will know how bad it will get, but since social distancing has only been in place for a few weeks…one can imagine it will get very very bad there too.
Enough rambling for an Easter Monday morning
In Spain there is a lot of criticism for the government’s amateur or careless attitude , just an example but it is on various fronts
at regional level there is a lot of disagreement, Cataluña is even threatening to take control of emergency measures so they aren’t lifted. The Spanish seem to have gone full control, a large majority for blanket testing, a majority for geolocalisation of those infected, and just under a majority for passports for virus free
Your Mexico observations sound familiar to me. I’d be in Japan right now without the travel restrictions so I followed the country closely the last few months. They didn’t take things seriously and the media downplayed everything until, magically, the day the Olympics were postponed. Suddenly their national case load shot up (due mostly to testing) and the media shifted gears to admit a much greater threat. Even though the population is docile there, they aren’t idiots and now a lot of anger is being directed at Abe for caring more about the Games than his own country.
There is nothing that makes the US uniquely vulnerable to viruses. Unlike many other countries, we are testing and releasing numbers. One can only wonder how many countries have downplayed their numbers for their own gain, political or otherwise. China has lied of course, but even small countries like Ecuador have been the scene of bodies being burned in the streets due to overcrowded morgues despite meager stats.
Who knows what the actual figures are globally, but there has been a lot of underreporting during the entire event.
I see bailing out individuals as the same thing as bailing out good businesses. The money going to individuals will flow to the businesses providing the most value to the market. Those businesses that provide little value won’t see that cash flow and will go the way they should go.
Any bail-out of businesses is always the government picking winners.
If they are taxing business to pay for individual welfare though it becomes unbalanced, and if following the MMT route then it is something else altogether.
In Spain they might introduce something similar to UBI tomorrow, where basic income is guaranteed for all. Currently 30% of the population are on some kind of benefit
Which was finally rejected by government for the original project they are working on, which adds up to the same maybe but over a longer timeframe as different existing benefits are phased out. This is the original coalition agreement