by Morton D. Rosenbaum | May 01, 2004

William Vastine


William Vastine

When Mexico’s legislature voted in January to eliminate all value-added tax on international meetings, it no doubt expected support from its hospitality community, as well as from planners who can now save up to 15 percent off their total meeting bill in the country.
    But one important segment of the market, incentive programs, was excluded from the zero-tax initiative.
    According to Eduardo Chaillo, executive director of the Mexico Convention Bureau, the omission was due to the nebulous line, at least in the minds of the legislators, between incentive and leisure trips. Several groups in the country have taken action to highlight the distinction, and gain tax exemption for incentives alongside other types of meetings.
    On the national level, the Mexico City chapter of the Society of Incentive & Travel Executives, in collaboration with the Mexico Tourism Board and the Ministry of Tourism, has proposed such revisions to the law. At press time, the Mexican government had not acted on the new proposal.
    Some hoteliers in popular incentive destinations such as Los Cabos and Cancun have voluntarily waived the zero-tax privileges on all their international meetings business, a sacrificial move made in protest of the exclusion.
    Among them is Ella Messerli, vice president of the Association of Los Cabos Hotels. “If nobody raises their hand to take exception,” she said, “[Congress] will just move on to the next thing; But if we all say that this is discriminatory, that we’re just trying to generate money in the same industry, then hopefully this law will change.”
    U.S.-based incentive planners also want to see the law extended. William Vastine, president of Arlington, Tex.-based incentive firm Galactic Marketing, suggested the one market excluded from Mexico’s VAT law is potentially its most valuable.
    Besides dollars spent on programs, Vastine pointed out other ways the country benefits from this segment of the market: “I suspect [incentive] participants spend at least as much money [as meeting attendees] in Mexico, if not more,” since they have a lot of leisure time and their visits are typically longer.