People residing in the United States are transferring an increasing amount of money to friends and relatives in Mexico.
According to Banxico, Mexico’s central bank, such remittances were up 6.3 percent in January compared to the same period last year.
The amount of money sent per transfer, and the number of transfers both exceeded statistics reported a year ago. In January 2016 Banxico reported 6.465 million operations, compared to 6.962 million this year—an increase of nearly a half-million transactions. Remittances are historically at their lowest in January, and peak in May.
Remittances are an integral source of foreign revenue for Mexico, with a total of $26.9 billion transferred out of the U.S. to Mexico in 2016, according to Banxico.
In 2015, remittances topped the list of Mexico’s foreign currency sources, surpassing oil revenue, foreign investment, tourism and manufacturing exports.
Funds from remittances tend to show up in Mexico’s poorest regions, where many former residents have fled to the United States and left relatives behind.
Since remittances are transfers of previously owned money, as opposed to payments for goods or services, they are not taxed by the United States. Mexico does not tax funds received via remittances, as long as the transfers do not exceed a pre-determined amount.
President Trump has proposed taxing or impounding money transfers as a way to force Mexico to fund the proposed border wall.
H/T: The Hill
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