EL PASO, Texas (Border Report) – Mexican officials are publicly knocking a proposed bill in the U.S. House of Representatives to impose a 5% tax on remittances.
Mexico last year received $64 billion, mostly in the form of wire transfers, from citizens residing and working abroad. These remesas, or remittances, have become one of that country’s top sources of foreign income in the past few decades.
“All Mexicans over there pay taxes, whether they have (immigration) documents or not,” Mexican President Claudia Sheinbaum said at her Wednesday news conference broadcast on social media.
Sheinbaum read from an open letter issued Tuesday by a Mexican Senate commission lauding the contributions of Mexican workers to the U.S. economy and calling on American lawmakers to build bridges instead of “raising economic walls.”
“Everyone from all parties said no. We are not in agreement with this injustice, which is discriminatory,” Sheinbaum said on Wednesday morning.
The so-called One Big Beautiful Bill presented in the House Ways and Means Committee by Chairman U.S. Rep. Jason Smith, R-Missouri, includes a new excise tax on remittances. The amount of the tax is not set in the bill, but discussions indicate it could be 5%.
Carlos Marentes, executive director of the Border Farm Workers Center in El Paso, agrees the proposal smacks of double taxation.
“I have seen farm workers send remittances and show their Mexican passport with the H-2 visa,” Marentes said. “This is money they earned working, that their employer deducted taxes from. In addition, when they send the money home, they pay the (electronic wire) fees.”
Fees to send money to Mexico range from 1% to 3%, depending on the vendor or the bank. Some banks might have standard fees. The Bank of Mexico reports that 90% of the remittances, which average $330, are sent electronically. Alternate means of delivery include money orders over regular mail and, direct carrying of cash back home.
Marentes said the remittances are important not only to the immigrant worker in the U.S. and his or her family in Mexico, but also to North America’s economy and social stability.
“Most of the farm workers in El Paso have built homes in Juarez, in Torreon with the money they send to their families. This leads to the (development) of many rural communities” in Mexico, he said.
Traditionally, most Mexican economic migrants to the U.S. come from low-income communities south of the border. They traditionally work in construction, agriculture, hospitality and food services. Their presence in the health services industry has grown since the COVID-19 pandemic.
The Pew Center reports 29% of all agricultural workers are immigrants (both legal and undocumented), a quarter of all construction workers are immigrants and 20% work in leisure and hospitality.
Marentes said previous Mexican administrations recognized the importance of remittances in the social development of rural Mexico. So much so they had programs such as “3×1” and “2×1,” which invited Mexican workers in the U.S. to send a separate remittance for public works in their communities, which the local government matched with its own funds.
State or federal governments pitched in, hence the double and triple match in “2×1” and “3×1,” with the numeral 1 representing each peso (19 pesos equal a dollar) the migrant sent from abroad.
Funds were used to build schools, parks, roads, community centers and sports fields, according to the website for Programa 3×1 para Migrantes, whose last entry appears to be from 2017.
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