Last updateFri, 20 Jun 2014 1pm

The confusing new tax reform:  Sinking small businesses, boosting joblessness while creating a new shadow economy?

Mexican citizens and foreign residents were still reeling under the weight of President Enrique Peña Nieto’s most recent brain storm – a new, amazingly confusing, confused and onerous set of tax laws – when the Republic was hit by a government move surprising economists here and abroad.

Friday, June 6 Mexico’s central bank launched a record-setting key interest rate cut to three percent.  It was an attempt to compensate for continuing weak economic growth administrated by a president who came into office vowing to re-invigorate the Mexican economy.  The cut followed 2013’s disappointing growth of 1.1 percent.

Despite Peña Nieto’s subsequent airy pitch that the economy would soar simply with the announcement that legislators had approved his wish to end the government monopoly of Petroleos Mexicanos (Pemex), the Republic’s only oil production agency.  Contrarily, consumer confidence took a dive, and now seems sure to drop more on the back of government’s sprawling, irritatingly confusing effort to try to supervise every monetary transaction in the country.  

No one, inside government or out, seemed to really understand what the new regulatory laws meant or how they would, theoretically, function beyond boosting the cult of insider political machinations and profit.  Questions by students studying economics at local schools of higher learning seemed to have slim chance of getting a clear answer regarding how the new regulations are really meant to function.  There are, of course, solemnly delivered explanations that tend to become garbled and logic-tangled once questions begin to sprout.  Those were often uncharitably accompanied by references to “just another shakedown.” 

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