Downtown business owners react to Mexican tax rate hike

Starting tomorrow shoppers from Mexican border towns may have even more reason to come to the U.S. to spend their pesos. The federal Mexican tax rate is increasing from 11 percent to 16 percent.

Tu Moda owner Estevan Esquivel hasn’t been in business on El Paso Street in downtown long and isn’t sure if the increase in the Mexican federal tax rate will help his sales. His business is so close to the border he says he gets a lot of shoppers from Ciudad Juarez and describes what they look for in his store.

“Dresses and sweaters because of the weather right now, you know, it’s kinda chilly outside so mostly dresses and sweaters,” Esquivel said.

Starting Jan. 1, 2014, Mexican border regions are matching the rest of the country’s tax rate. Downtown El Paso shop owners hope that the increase in taxes across the border will mean more business for them.

One shop owner who has been in business for 26 years heard about the increase and is excited.

“I love to sell car audio because in America everybody has a car. It’s a big market,” Han Park said. He wants part of the $4.5 billion Mexicans spend a year in Texas border cities, according to the Federal Reserve Bank of Dallas.

“I hope it will help the El Paso economy, especially downtown,” Park said.

One University of Texas at El Paso economics professor estimates the tax hike will cause Mexican shoppers to spend between 5 percent to 10 percent more on the U.S. side of the border in the coming year.

That means good things for businesses that can be accessed so easily.