The investment that Tesla, the manufacturer of electric cars, will make in Nuevo Leone will require the support of the country’s government for the development of infrastructure, which could stop or reduce the payment of local taxes, according to Oxfam Mexico.
If they are released, reductions are made or fiscal policies are used to pay taxes (ISN), there is a hidden risk that the benefits of the investment do not reach where they are going and the beneficiary is the company itself. that is to invest in the country Carlos Brown, director of research and evaluation at Oxfam Mexico, told El Economista.
“Tesla is one of the companies that usually use machinery to reduce the payment of taxes where it operates (…) maybe it will not be job creation, but the general benefit may not be as much as one might think,” he commented.
Brown Solá explained that it is a false belief that tax concessions are decisive when making an investment of this size, because what is really important is the infrastructure, the connectivity in the airports and ports; as well as the capital and wage-paying people.
There are dangers in the concessions and gifts we give them for granted. “The currencies in Nuevo Leon are very weak, like those of the whole country except for Mexico City,” he said.
The director of the research mentioned that if tax concessions are the main factors that trigger investment, Paraguay and Somalia would be great singers for innovation and investment attraction, because they have the lowest tax rates in America and Africa respectively.
A few days ago, Samuel GarcÃa, governor of Nuevo Leon, commented in a press conference that Tesla’s legal team will arrive this week to review the results of the incentives to build a gigafactory in Santa Catarina.
It should be known that when the factory of Kia Motors, a Korean company that manufactures cars, was built in Nuevo Leone, the government of Rodrigo Medina granted tax incentives such as exemption from the payment of Tax (ISR), value added tax (VAT), ISN and other things that were not in the law included, which represented an expenditure of about four thousand thousand pesos.
However, the government of Jaime RodrÃguez and Kia was part of the agreement to the incentives granted, which was the donation of land in the municipality of Pesqueria, state, and was a 95% reduction of ISN five. years in others.
The manufacturing sector
In addition to the above, Brown Solá commented that Tesla will enter the manufacturing plant in Mexico, which already receives many tax benefits such as exemptions or special government.
“Much of the Mexican tax system benefits this particular group of companies. For example, many are based on the northern border and have a special government ISR or VAT. They are also in a territory that has more utility than the rest of the country.”
Companies in the manufacturing industry accounted for 66.2% of the VAT refund in 2022. The total amount counted was 530,298 million pesos at the end of 2022, which represented an annual increase of 28.1% in real terms.
The economy is turning, the story
The Mexican government expects Tesla to invest 4.5 billion dollars as part of the first stage in the new plant; However, this economic flow does not mean that the entire population will benefit.
Brown explained that, based on the evidence, there are few who actually benefit from the big money deal, since the system in Mexico is designed that way. “The most hidden danger is the fallacy of believing that economic benefit reaches all people.”
Oxfam’s partner argued that the tax system should be rethought in such a way that it covers a lot of impacts, which allows fair compensation for the economic, environmental and health impacts of assembly plants.
“Those attacks, like the use of water or air pollution, the majority of people in the state that live in Nuevo Leone, are at the expense of the current situation.”
