In June of this year the Mexican President proposed a tax reform package to increase revenues. Most notable within the tax reform package was the proposed Contribución Empresarial de la Tasa Única (Business Activity Flat Tax, or CETU). CETU is a flat tax that organizations and individuals would pay on business activities as an alternative to the income tax. The current income tax has a higher tax rate than the proposed flat tax, but the former includes deductions for donations to nonprofit organizations which the CETU omits.
To support the debate about the implications of CETU to civil society, ICNL was invited to engage in an Internet blog. On July 27th we joined the Hewlett Foundation in The Fiscal Debate, The Coming Changes, hosted by the widely read Mexican newspaper El Universal. More than 3000 readers hit the blog, demonstrating the great concern surrounding the tax reform package and its impact on civil society.
In the discussion, ICNL answered questions about comparative experiences in other countries with similar taxes as the CETU. In particular, while expressing concern for the possible negative impacts the CETU, ICNL noted that certain other ‘flat-tax’ countries do allow deductions for donations to nonprofit organizations.