By now I'm sure everyone has heard of the big change in structure and operations of national oil giant Petróleos Mexicanos (PEMEX). PEMEX was established 75 years ago, when president Cárdenas nationalized the Mexican petroleum industry expelling foreign oil companies from the country and seizing their assets. Until today the company could not receive private capital investment, nor could foreign enterprises participate in its petroleum exploration and production operations. No more! The markets are happy and the international rating agencies have already upgraded Mexico based on the change. On the street we're likely notice little change for years as exploration and deep-water extraction will see the biggest investor action. Last week I bought gas and it was 11.20 pesos per liter or about US$3.23 per gallon. I wouldn't mind seeing that go down.
Also in the news, Mexico's minimum wage will increase to just over US$5/day. That's right, per day. Government cost of living studies show that at current prices, the minimum daily wage will purchase a half kilogram of chicken, a kilogram of eggs, one liter of milk and less than a kilogram of tortillas, the national staple. (1 kilo = 2.2 lbs).
Unfortunately, the increase in minimum wage comes at the same time as an increase in taxes for the many who live and work along the border states. In the past, border states have been paying 11% tax on most goods whilst the rest of the country was paying 16%. Sort of a universal sales tax or VAT called the IVA here. The administration's argument was that residents in Mexico’s border regions, where incomes are on average 27 percent higher than the national average, should not pay less sales tax than those living in poorer areas of the country. The plan is aimed at raising Mexico’s rate of tax collection, one of the lowest in the hemisphere, as well as increasing social spending to pay for a national pension system and unemployment insurance. It also aims to reduce dependence on oil revenue and to curtail the informal (i.e., under the table) economy, which now employs 60 percent of working-class Mexicans.
But not everyone is convinced and there have been, for example, renewed calls for Baja California to secede from Mexico.
As well, many cities along the border that were once competitive with US cities where the tax rate is lower will have trouble continuing to do so and they expect a significant downturn in sales and even employment. Also, some things that weren't taxed before are being added to the list such as dog food and higher taxes (about 8%) on soft drinks (they call it Mexico's version of the "Bloomberg Tax") and snack foods.
People I talk to are not as upset about the tax as they are about the level of corruption in Government. They understand the need for taxes to pay for services but they "know" this money will just go to corrupt politicians, not to the services and programs for the poor. The seemingly universal consensus around here is we'll see more people in debt and many more homeless animals.
What is a 5% increase in taxes for me (except for the dog food that goes up 16%) isn't hard too handle and will have a minimal effect on our overall budget. Most expats live in areas that already charged 16% so their budgets will hardly change. Which means Mexico is still a great place to consider for retirement purposes given the world-class medical, 1st world shopping and amenities, and a beautiful country full of history and culture. For another glimpse at the real Mexico check out Travel Secrets Mexico with lots of videos of the varied places Mexico has to offer. A great resource.
A certain publication extolling the virtues of retiring overseas has published their annual Top Ten. In alphabetical order as they presented it: Belize, Brazil, Costa Rica, Ecuador, France, Italy, Mexico, Nicaragua, Panama, and Uruguay. You can find it online if you're interested, I'll not give them the publicity because they do a great disservice in my opinion with their misleading, rose-coloured-glasses, articles and "testimonials". They are in the business of getting ignorant people excited and capturing those unable to think and research for themselves to buy into their services and products. That written, many people think highly of them. Hmmm.... Just be warned if you do track down the article read it with a critical mind and look carefully at the "cost of living" comparisons. You'll see more problems than just a comparison of apples to oranges.
A final observation, at least for today, on moving overseas. I frequent a number of expat forums (fora?) and lately found an interesting peculiarity on folks moving to Belize. Many of those who move like to detail their adventures for friends, family, posterity, and for those who have yet to make the journey. Which is all well and good for knowledge is nothing if it's not shared. But I noticed, and had confirmed by others, a disturbing commonality in recent travelogues. It appears as though there is competition amongst them as to who will go through most difficulties, experience the most hurdles, and yet come out at the other end lauding their decision to move to Belize. These accounts of surmounting great travails should have people thinking there is either a problem with the country or a problem with the people moving. Given the commonality of elicited issues and our own experiences in Belize the problem is....both. An overseas move does not have to be arduous or especially difficult. In fact, it can be quite easy and non-problematical if properly prepared mentally, physically, and materially. But I guess you have to do it more than once or twice to get the hang of it, yes?
The dogs and cat are doing fine, ignorant of the wonderful life they lead. Joey's in heat this week so early next year she'll be visiting the vet to take care of that! I've almost picked out the location for the new fruit trees and they'll be planted soon. I've decided to keep the lemon tree separate from the limes just to avoid cross-pollination (even if I'm not 100% sure that's an issue). Besides, we need another tree or two in the back to balance. And finally, as I missed December's full moon whilst celebrating Saturnalia on the 17th, I'll have to wait for January 15th for proper planting time. At last the seemingly constant rains have stopped and we should have clear blue skies and warm weather through Christmas.
I regret there is no recipe this week but I hope to make up for it with an excellent new concoction next week. That written, in the manner of Julia Child....buen provecho!
Oops, almost forgot! To all a very Merry Christmas and best wishes for a healthy,happy, and prosperous New Year!