Mexican sales tax hike seen as boon for U.S.

CHULA VISTA, Calif. (AP) - Mexican license plates are common in parking lots of shopping malls in U.S. border cities. They will be even more familiar after Mexico raises its federal sales tax in border regions to match the rest of the country, say merchants and shoppers.

The increase to 16 percent from 11 percent, which takes effect today, has sparked large protests on the Mexican side of the border. Facebook pages with secessionist tones have generated about 200,000 "likes." Thousands have signed petitions to challenge the tax hike in court.

The Mexican government says the two-tiered tax structure, which was introduced decades ago to make border cities competitive, is no longer justified. Others say the increase may backfire by driving more shoppers north of the border, harming the economy and raising less tax revenue than anticipated.

U.S. border regions like California's Imperial Valley - which has three Wal-Mart Supercenters and only 175,000 residents - have long depended on Mexican shoppers who buy everything from gasoline to groceries.

Mexican shoppers spend more than $4.5 billion a year in Texas border cities, according to the Federal Reserve Bank of Dallas.