What's Going On In This Country?

July 23, 2018 Edition
BY: SANTIAGO VERDUGO

We’re next! Up in the Chihuahua desert of northern Mexico, there is a shimmering blue field of solar panels the size of 2,200 football fields. This Italian owned largest solar installation in Latin America has 2.3 million solar panels that power 1.3 million homes. It is the biggest solar project in the world outside of China and India. The panels are designed to turn in tandem with the sun, like a field of metallic sunflowers. They are part of Mexico's push to generate 35% of its electricity from clean sources by 2024.

 Here in Southern Baja, where we suffer the highest priced electricity in Mexico, we now have two solar farms in the works. Well, almost. Supposedly they’re coming. That’s the good news. The bad news is the owners of the solar panels are expected to sell all their juice to CFE, the electricity utility. We’ll be right back where we’re starting, at the mercy of CFE.

Sales tax going down. For other people, not us. President-elect López Obrador has a plan to cut the sales tax (IVA), rate within 20 miles of the border back down to 8% from the current 16% imposed in 2014. Sales tax in the rest of the country is 16%. He says his aim is boosting the economy in the north of the country and slowing down migration to the United States. He said a lower tax rate would have a positive effect on production, although he also said that growth in the border region is already generally higher than the national average.

He also said the reduced tax rate would mean more money to spend on consumer goods, adding that lower prices would encourage residents to shop at home rather than across the border. And that is the key. People flock across the border for a wider selection of products at a cheaper price, as well as sales tax of only 8% in California. Collection of sales tax in Mexico was taking a hit. Mexicans who live near the border spend US $7 billion annually in the United States, meaning that even if a fraction of that amount is spent in Mexico instead, the benefit to the local economy would be significant.

But some think that halving the sales tax in the border region would lead to an annual reduction of tax revenue of US $1.6 billion if overall economic growth of 2.2% is maintained.

In addition to establishing a duty-free zone, the López Obrador-led administration will seek to drive economic growth in the northern border region by promoting better policing, the establishment of industrial parks, and less regulation.

Currently many Mexicans walk over the border dragging an empty roll along suitcase they fill with purchases before dragging it back over the border. Who’s to say they haven’t just visited aunt Maria in San Diego? The Mexican taxing authority knows they’re missing a lot of those cases.

Getting out of Dodge. Well, getting out of Mexico City would be more accurate. Mexico is an extremely centralized country. Tax revenue is raised and sent to Mexico City before being disbursed back to where it came from, sometimes equitably, sometimes not. But nearly all large corporations as well as government agencies headquarter in this clogged metropolis of 10 million people or so.

The president elect wants to change that, saying, “There are regions like the Bajío, the Riviera Maya, some border cities and some regions in the center of the country that have growth of 5% to 8% but other places instead of growing, they decline,” López Obrador said. “It’s not fair or advisable that public and private investment be concentrated only in some areas of the country.”

So he’s picking up and moving some of that federal buerocracy. The first departments to be moved will be the Secretariat of Tourism to Quintana Roo, (think Cancun), and the Secretariat of the Environment to Mérida, Yucatán. Well, OK, but please remember Baja Sr. Secretary of Tourism.

Try again. President-elect López Obrador’s proposed tourist train between Cancun and Tulum is a retread of the train current President Pena Nieto promised us when he first took office. The 80 mile project was shelved then because there was no money for it. The President-elect didn’t say what hat he planned on pulling the $3.5 billion out of. 

So what about us? Hows about a cool train in the Baja? We could totally see a train going from the border to Cabo.

Woman power. When the new Mexican congress takes office on Dec. 1, women will make up 49 percent of the lower house and 51 percent of the senate. Mexicorank fourththe world for women’s legislative representation, and it will be the only country with an elected senate that is majority female.

Across the board, Mexican women won big in this month’s elections. The second most important political position in the country (mayor of Mexico City) also went to a woman. Women will make up 50 percent of most state legislatures. Women’s wins are the result of 15 years of electoral reforms, in which Mexico incrementally refined the affirmative action rules that compel political parties to nominate women. Oh, the parties tried to get around these laws, even nominating men who claimed to be transgender. In a country where domestic partner abuse is rampant and often winked at, maybe things will improve there, too.

More tourists, please! Rodrigo Esponda, managing director of the Los Cabos Tourism Board, is hopping on the president-elect’s bandwagon, saying he will be good for the industry. He also announced that next season there will be new direct flights to Los Cabos from Chicago’s Midway, Ottawa, Milwaukee, and Cincinnati. Cold places, coinky dink?According to Esponda, Los Cabos has the most expensive hotel rate in the country, averaging about $300 per night.

State visit. Last week Mike Pompeo, the US Secretary of State, visited first the sitting President of the Republic, and then the president-elect, all in one busy day.

 

Along with Pompeo Came Treasury Secretary Steven Mnuchin, the secretary of National Security, and the son-in-law Jared Kushner.

The delegation wants a chit chat on immigration issues and drug trafficking.

The US Treasury guy will meet with Mexico’s treasury guy, most likely about the NAFTA talks which seem to be going nowhere.

Abortion rights gets boost. The incoming president was an early champion of abortion rights when he was mayor of Mexico City and now his future interior minister, Olga Sánchez has announced she will seek to promote the decriminalization of pregnancy termination until a woman is 12 weeks along.

She explained she believes in abortion until 12 weeks along because she believes that women "should not be deprived of their freedom."

Acknowledging it is a topic that polarizes the country, she will seek a dialogue with the state congresses to deal with this issue, in addition to others such as the law which contemplates the right to a dignified death for a terminally ill patient.

The Federal Penal Code provides that a woman may interrupt her pregnancy without being criminalized when the pregnancy is the result of rape or when the woman or the product of conception is "in danger of death". However, in, 18 of 32 states contemplate the legal protection of the fetus.

Sánchez Cordero explained that the National Regeneration Movement (Morena) party is in control of 22 state congresses, which will favor the promotion of this decriminalization of the termination of pregnancy.