Mexico City – The lower house of Congress has approved steep hikes to two taxes that foreigners pay to enter Mexico, triggering criticism from business groups that are urging the Senate to vote against them.
Deputies approved a whopping 388% increase to the DSM immigration services tax and a 58% hike to the DNR non-resident tax.
The reform passed by the Chamber of Deputies increases the former to 380 pesos from 77 pesos and the latter to 885 pesos from 558 pesos.
To enter the country, tourists would be required to pay a total of 1,265 pesos (US $66), 98% more than they currently pay. (The DSM is only paid by visitors arriving by air.)
Four private sector groups – the Business Coordinating Council, the Confederation of Industrial Chambers, the National Chamber of Air Transport and the Mexican Transport Council – called on senators to stop the tax hikes, warning they would have an adverse effect on tourism and business.
“…Mexico would lose competitiveness as a tourism and business destination to countries with lower tax burdens,” the groups said in a statement. “…The increases …represent a severe blow to the travel budget of foreigners who travel to Mexico,” they added.
Taxes and other fees included in the price of an airline ticket to Mexico are the highest in the world, the newspaper Reforma reported, making up about 45% of the total cost of flying in to the country.
Revenue from the DNR tax, approximately 6 billion pesos (US $314.6 million) annually, was previously allocated to tourism promotion. But the current federal government disbanded the Tourism Promotion Council and has said that the DNR revenue will help finance construction of the Maya Train project on the Yucatán peninsula.
DSM tax revenue is supposed to be used to improve the country’s immigration services, including the implementation of new technology. However, the business groups claimed that it hasn’t been used for that purpose in recent years.
They said that if the revenue is used as it should be, “optimal” immigration services can be achieved at the nation’s airports without raising the DSM tax.