Kia has been in Mexico for little over three years, what a three years its been! They now represent a massive 7% of the market and wish to deliver 100,000 vehicles by the end of 2018. Their production figures for their assembly plant in the outskirts of Monterrey, Nuevo Leon have been even greater, almost a third of a million cars, 57% of which get exported to America.
However, as with pretty much everything in this country, there’s a dark side to Kia: Taxes. The reason car makers love Mexico is because our politicians are very smart. They know that industrial jobs both require little formal education, and give a decent salary. They know that we have huges swaths of shores for ships, incredible highways, and generally good infrastructure save for railway raids.... But they also know that car makers love a depreciated currency that hurts mostly the middle class, and all these free trade deals. We also have permissive governors ready to give out tax credits to anyone just for good press or to put a quick fix on an issue like unemployment or underemployment. As Porfirio Diaz used to say, “a dog with a bone don’t bite or bark.”
What did Kia do? Nothing. Just probably bribe Nuevo Leon’s former governor into giving them ridiculous tax exceptions, like excepting their employees of income tax for twenty years.
Yeah. But even when that fell off, the current governor donated the land to make the factory, exempted their employees of 95% of income taxes for 5 years (Impuesto sobre nomina), and also allowed the municipality of Pesqueria to exempt them of half of their property taxes. The deal is so immense that it will represent up to 11% Nuevo Leon’s debt.
But hey! What can you expect of a land-locked state government that spends 100 million dollars making a centralized office that has flooded multiple times.