HARLINGEN — Harlingen continued its sure-footed gains in monthly state sales tax reimbursements, showing a rise of 2.3 percent for December and 4.26 percent for the year, the Texas State Comptroller reported.
Brownsville was less fortunate, showing sales tax reimbursements down 8.28 percent, putting it down 5.70 percent for the year.
In Hidalgo County, McAllen was down a whopping 10.36 percent for the month and 7.43 percent for the year.
By all indications, the weak peso is taking a bite out of cross-border retail trade in cities which rely heavily on Mexican shoppers. What is particularly troubling is these taxes were collected on sales during the peak holiday shopping month of December.
Economist Salvador Contreras, director of UTRGV’s Center for Economic Border Studies, said a broader and longer look at the economy of the Rio Grande Valley provides a more balanced view than monthly sales tax reimbursements by municipality.
“You may decide to consume your December budget in November,” he said. “Or you may decide to buy your TV from Best Buy in a different city. Either way, total expenditure may be unchanged.”
Contreras said looking at total payments at the county level over the past three months, compared with the same period in 2015, shows sales tax reimbursements payments to Cameron County are down 1.6 percent and in Hidalgo County down 1.9 percent.
“In general, I would say that the trend here is not ‘highly’ concerning,” Contreras said. “The peso has been depreciating since 2014 and the effect on retail sales to the region has been felt over the past three years.
“The third quarter of 2016 sales figures suggest that the peso likely continues to hurt sales,” he added. “However, I believe the regional economy is more diverse and better able to absorb declines in spending by Mexican shoppers.”
Elsewhere, South Padre Island showed a strong month with an increase of 6.16 percent over last year, putting the Island up 10.36 percent for the year.
San Benito showed a monthly increase of 5 percent, which puts the city up 3.26 percent for the year.
Mercedes’s sales tax reimbursement for the month showed a dramatic decline of 17.20 percent for the month and 14.81 percent for the year, both indications of weak interest in the outlet malls by shoppers.
The good news for cross-border trade was the Mexican peso strengthened against the U.S. dollar Friday.
The impetus behind the peso’s rise apparently is today’s visit to Washington by Luis Videgaray, Mexico’s secretary of foreign relations. Videgaray is to meet with Secretary of State Rex Tillerson and Secretary of Homeland Security John Kelly.
The peso reached a low of 21.95 against the dollar the day after President Trump’s inauguration. Since then, it has gradually strengthened to reach 20.62 pesos to the dollar yesterday.
In February 2015, the exchange rate was 14.95 pesos to the dollar. The Mexican peso has lost 38 percent of its value against the dollar in two years.