A sharp decline in remittances from U.S. workers to Mexico has sent shockwaves through the country, with experts warning that a proposed tax on these vital funds could have catastrophic consequences.
According to data released by the Bank of Mexico (Banxico), families in Mexico received $4.76 billion in wire transfers, checks, money orders, and cash from abroad in April, representing a 12.1 percent year-over-year decline – the largest dip since September 2012. This decline follows three consecutive months of falling remittances.
The average remittance to Mexico is a modest $385, according to Banxico. These funds are crucial for families who rely on them to cover basic needs such as food, medicine, and shelter. The tax proposed by the U.S. Senate – a 3.5 percent levy on remittances – could further erode these lifelines.
Mexican President Claudia Sheinbaum Pardo has called on the U.S. government not to impose the tax, which would generate an estimated $22.2 billion in revenue from 2026 to 2034. A diplomatic delegation is set to meet with members of the U.S. Senate to urge them to exclude the remittance tax from budget reconciliation talks.
Mexican activists are also mobilizing against the proposed tax, arguing that it would punish those who are already struggling the most. “These are not luxury transfers,” reads a petition on Change.org signed by almost 1,000 people. “They are modest amounts used to cover food, medicine, and shelter.”
The activists warn that further declines in remittances will force many to migrate illegally to the United States, exacerbating the country’s migration crisis. According to them, remittances play a quiet but powerful role in reducing irregular migration by helping families meet basic needs at home.
As the debate over the tax continues, Mexico’s economy and families are bracing for the worst-case scenario: a sharp decline in remittances that could have devastating consequences for their livelihoods.
Source: Border Report
