Monday, July 2, 2007

U.S. Immigration and Mexican Fiscal Reform

By Allan Wall

On June 28th the Bush-Kennedy Immigration Bill, S. 1639, was defeated in the United States Senate by being voted down on a cloture vote.

In Mexico, where U.S. immigration legislation is followed closely, the Senate vote was almost immediately slammed by Mexican President Felipe Calderon, who called it a “grave error.”

This was followed up in Belize, where Calderon traveled to meet with Central American leaders.  There, Mexico and all of the Central American countries called upon the U.S. Congress to take up the measure again, and presumably vote their way.

This kind of knee-jerk response to U.S. immigration policy has become quite the norm for some Latin American leaders for whom emigration has practically become a state economic policy.

Even Tony Garza, U.S. ambassador to Mexico and a Bush crony, got into the act, releasing a diplomatic statement expressing his disappointment with the U.S. Senate.          

The facts are that S. 1639 was unpopular among the American people, it was an amnesty, it did not solve the border security problem, and it was negotiated behind closed doors by the political elite of both parties. Nevertheless, a grassroots outcry made itself heard in the Senate and shut down S. 1639.

Mexican leaders should respect the decision, and use their energy to concentrate on improving the Mexican economy.

And what a coincidence!  The defeat of S. 1639 in the U.S. Senate beautifully coincides with the ongoing negotiations over Mexican fiscal reform, which is very important for the future of Mexico and its economic development.

Calderon has sent his fiscal reform proposal to Congress. And the two major opposition parties, the PRD (Party of the Democratic Revolution) and the PRI (Institutional Revolutionary Party) want to make their own proposals.

Not only are legislators getting into the act, so are state governors. And Marcelo Ebrard, chief of the Federal District (and a possible 2012 presidential candidate), wants to put in his two centavos worth.  The more the merrier.

Hopefully Mexico’s leaders can hammer out a viable and enforceable fiscal reform.

Such a reform would replace Mexico’s current inefficient tax system — with its 40 percent evasion rate — with a better one that is fair and equitable.

Rich Mexicans need to pay their fair share.

Mexico’s richest man is Carlos Slim, who according to one calculation may have just passed Bill Gates to become the richest man in the world.  And is it not rather embarrassing to have the richest man in the world from the same country that makes a national obsession out of emigration?

A better Mexican taxation system would take the pressure off PEMEX, the state oil monopoly, which now has to turn over most of its profits to the federal government, thus taking away funds that could be used for oil exploration, exploitation and processing.  As things now stand, Mexico is importing 40 percent of its gasoline!

A new fiscal system could grant more authority to state and local governments. Currently the federal government disposes of 80 percent of all Mexican government resources.  The states spend 16 percent, and municipalities (whose governments affect citizens’ lives on a daily basis) only one percent.

Most importantly, Mexican fiscal reform should bring about a new system that would make the Mexican economy more dynamic, providing more jobs and better paying jobs to Mexicans in Mexico.

Indeed, this is what Mexican leaders should be concentrating on, and not U.S. immigration policy!  That, after all, is the responsibility of the U.S. government.

In fact, Mexico should use the defeat of S. 1639 as an opportunity for reform. At long last what if the United States finally does tighten up its border and decrease immigration levels? 

Historically, the United States goes through both high and low levels of immigration.  From the 1880s to the 1920s, the classic Ellis Island era, immigration levels were high. In the 1920s, immigration was cut off and remained low until the 1960s. That low immigration period allowed the United States to assimilate all those previous immigrants.

Immigration levels have been high for the past 40 years, since the 1960s.  The historical precedent might indicate that another period of low immigration is in the future.

That means that Mexico should not be relying on high U.S. immigration levels to solve its economic shortcomings. Mexico needs to improve its own economy, to provide jobs for her own people.  That’s much better in the long run anyway.

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Allan Wall, a MexiData.info columnist, recently returned from a tour of duty in Iraq.  He currently resides in Mexico, where he has lived since 1991. He can be reached via e-mail at allan39@prodigy.net.mx.