Mexican shoppers head to Texas to avoid higher tax

SAN MARCOS, Texas - Texas retailers are getting an earlyChristmas gift this year from their southern neighbor: swarms of eagerMexican shoppers.

A recent sales tax hike in Mexico'snorthern region has been sending Mexican citizens north of the border -in cars, planes and tour buses - for their Christmas shopping. Theshoppers - looking to save money and score on the latest brand names ofTVs, toys and clothing - are arriving by the busload from as far away asMexico City and Jalisco to outlet centers and malls across Texas, saidPete Garcia, executive director of the South Texas chapter of the UnitedStates-Mexico Chamber of Commerce.

"It will be a huge benefit forall of South Texas, from the border of El Paso to McAllen all the wayup to San Antonio, San Marcos and Houston," he said. "You're going tosee a significant jump in those shoppers."

Mexican lawmakers inOctober raised the sales tax in the country's northern region from 11%to 16% - or twice the rate in most Texas municipalities, said TomFullerton, professor of economics and finance at the University ofTexas-El Paso. Mexico's northern region had enjoyed a lower rate fordecades to compete with U.S. retailers across the border, but the taxwas raised to equal the rest of the country as part of nationwide taxreforms, he said. Texas' statewide sales tax is 6.25%, butmunicipalities can raise that another 2 percentage points.

Mexicanresidents typically account for around $4.5 billion in retail sales inTexas counties along the Mexican border, Fullerton said. That number isexpected to jump by $225 million due to the new tax hike, with retailersas far inland as Houston and San Antonio reaping the benefits, he said.

Eventhough the tax increase doesn't go into effect until January, the badpublicity the measure received in Mexico is driving shoppers across theborder early for their Christmas shopping, Fullerton said.

"Thiswas a very controversial bill in Mexico," he said. "There will be a lotof customers who will be shopping across the border even before theactual tax occurs."

At the Tanger Outlets in San Marcos onSaturday, white passenger buses with Mexican plates pulled up to thecurb and dislodged clusters of Spanish-speaking passengers who headedstraight to Old Navy, Calvin Klein, Banana Republic and other stores.The parking lot resembled a lot in Guadalajara or Monterrey, crowdedwith cars with license plates from Coahula, Nuevo Leon, Jalisco,Tamaulipas and Ciudad Mexico.

Ernesto Rangel, 45, drove the 14hours from Mexico City to San Marcos to get the latest models inelectronics and clothing, do some Christmas shopping - and avoid thehigher sales tax.

"It's cheaper, and we find things you can't findin Mexico," he said as he positioned a new Phillips surround soundsystem in the trunk of his car. "I can do all my Christmas shoppinghere."

Mexican residents make up such a significant part of theoutlet center's sales that management recently printed off promotionalposters and brochures in Spanish and plastered them around the sprawlingcenter, said John Lairsen, the outlet center's general manager. "I'llassume we'll continue to see that increase" with the new tax hike, hesaid.

Outside, one of the large white passenger vans contained thefamily of Carlos Gomez, 54, of Jalisco, Mexico. Gomez was leading hisextended family - 28 people from five families - on a shopping andsightseeing tour that included stops in San Antonio, Houston and SanMarcos. The caravan drove from Jalisco, past the malls in northernMexico and straight to the outlet center in San Marcos, where they hopedto stock up on designer clothes, electronic toys and TVs.

Having so many shops in one place makes it worth the trip, he said.

"We do it for the convenience and for the sales," Gomez said. "Plus, we make a vacation out of it."


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