Remittances sent to Mexico dropped 4.6% in May compared to a year earlier, according to central bank data published on Tuesday, as the United States prepares to implement a tax on the transfers sent by workers to their families back home.
The figure for May hit some $5.36 billion, the accumulation of some 13.9 million transactions averaging $385 each. While the size of each transaction edged up compared to the same month last year, the number of transactions dropped some 5.7%.
Mexico, the world’s second-largest recipient of remittances after India, receives remittances chiefly from workers in the United States, where the Senate recently softened plans to tax these transfers, drafting plans for a 1% tax when they are made in cash.
Earlier drafts had planned to tax remittances 3.5%, a plan Mexican officials blasted as a potential violation of the treaty between the two countries to avoid double taxation, as income is already subject to local taxes in the United States.
U.S. lawmakers need to decide on a final version before the measure is signed into law.
Sheinbaum on Monday said that if the bill was approved, her government would announce a program to reimburse the 1% lost to the U.S. tax.
In April, the central bank logged the steepest drop in remittances in nearly 13 years, a reduction analysts attributed to an immigration crackdown in the United States which has seen workers stay home for fear of being deported. (Reuters)
