How Big is the Informal Economy in Mexico?
Big, affecting tax revenue. Mexican outdoor markets, called Tianguis, beach and street peddlers, taco stands and many more pay very small tax fees in the form of permits, but no more. No 16% Value added tax (IVA), no income tax, and no rent. This represents 23.7 percent of the Gross Domestic Product and is growing at a pace of 1.9 percent a year. And yet we wonder why Mexico’s infrastructure, education, public transportation and other themes are so bad. Sigh.