POSTED: Monday, October 28, 2013 - 5:13pm
UPDATED: Tuesday, October 29, 2013 - 8:13am
MCALLEN, TX (KVEO NEWSCENTER 23) — The Mexican government is considering ending some tax breaks that could impact the economy in the Valley.
The tax changes would hit the maquiladoras on the Mexican border towns; those are the producation plants that employ around 100,000 workers in Reynosa alone.
"The maquiladora industry that's been going on for 30-40 years is now changing drastically," said Joseph Olmeda, president of the Maquiladora Association of Reynosa. "And that's based on this new tax reform."
In essence, the tax rate on the maquiladoras could rise from around 17 percent to more than 30 percent.
"We see companies coming back from China because they saw Mexico being a more competitive place," Olmeda added. "Now all that thought process has to change a little bit depending on how this tax reform impacts their decisions."
The maquiladoras industry is estimated to be worth around $3 billion to the Upper Valley region. In Reynosa, there are about 160 plants producing for steel, auto and boat companies, among others.
Some may say the plants enjoy a special kind of tax treatment. The plant managers understand the rates will have to go up for the country to fix its budget deficit and boost its social programs. They just question a double-digit tax increase.
"Will this keep companies from locating here," questioned Keith Patridge, president and CEO of the McAllen Economic Development Corporation. "Will they just say the violence is a check against them, the taxes is another check against them, we're going to go to another low-cost country."
The Mexican government will likely decide this week and the rates will go into effect in 2014.