Taxi Mafia

[cvchief]

Thank you Christi for adding the tax ramifications of accepting dollars for the taxi drivers as wellas other businesses in Cozumel. Along with the other costs of exchanging dollars into pesos might clarify the " fuzzy math" for some.

So Taxi drivers have more trouble and expense converting money than anyone else? People taking dollars at 10 to 1 are taking greater advantage of tourist with dollars than many or most other business people who don't. It can't be defended as the cost of taxis doing business when others succeed with a rate much closer to the actual rate.

Maybe that is a new business opportunity? Corporate consultant specializing in developing a business model where 10 to 1 isn't required to succeed! Just figure out how everyone else does it and teach the rest?

 

[judydivescoz]

So Taxi drivers have more trouble and expense converting money than anyone else? People taking dollars at 10 to 1 are taking greater advantage of tourist with dollars than many or most other business people who don't. It can't be defended as the cost of taxis doing business when others succeed with a rate much closer to the actual rate.

Maybe that is a new business opportunity? Corporate consultant specializing in developing a business model where 10 to 1 isn't required to succeed! Just figure out how everyone else does it and teach the rest?

Oh now Chief....we can agree to disagree on this. I think it's fine for any business including taxi drivers to charge a premium exchange rate to local or tourists who choose to use US dollars to pay. They are not a bank and have additional expenses (bank or cambio fees and potential taxes)and time spent to convert the dollars to pesos. Most use the easy math method of 10:1. They are not in the banking business. I don't think the business owners who may make a dollar or so an a transaction for accepting foreign currency are booking trips to Europe or buying Lear jets. Some might even make a few cents more using their dollars at Mega.
FWIW, I work in a store where 70% of our customers are tourists. The store is in a large shopping center. No store takes any foreign currency There is a business in the shopping area that exchanges foreign currency for dollars at just horrible rates similar to rates found in airports. The tourists use US dollars or credit cards. No whining about it, they just use the local currency.

 

[cvchief]

Oh now Chief....we can agree to disagree on this. I think it's fine for any business including taxi drivers to charge a premium exchange rate to local or tourists who choose to use US dollars to pay. They are not a bank and have additional expenses (bank or cambio fees and potential taxes)and time spent to convert the dollars to pesos. Most use the easy math method of 10:1. They are not in the banking business. I don't think the business owners who may make a dollar or so an a transaction for accepting foreign currency are booking trips to Europe or buying Lear jets. Some might even make a few cents more using their dollars at Mega.
FWIW, I work in a store where 70% of our customers are tourists. The store is in a large shopping center. No store takes any foreign currency There is a business in the shopping area that exchanges foreign currency for dollars at just horrible rates similar to rates found in airports. The tourists use US dollars or credit cards. No whining about it, they just use the local currency.

Well I agree with you that is is fine for businesses to cover the expense of their banking issues, however is there a limit? Not the practice, but the degree.

I find most place we go offer rate WAY better than 10 to 1. So if we assume most are hovering around 12 to 1, at what rate would you find it an unacceptable exchange rate? You say is isn't 10 to 1. Would 8 to 1 be unacceptable? 5 to 1?

My point is even if 10 to 1 isnt the spot, I have to bet there is a rate you would say is not acceptable. I just happen to think that a difference of 17% MORE than the more common 2.5% or so used by many businesses is excessive and looks bad. I am not worked up about, I just hold that opinion.

And I agree with using local currency. Respectful of the culture and all that.

 

[DandyDon]

On the way home from the next town over, saw a ESTATE SALE sign. I just can't drive by those without stopping, and yes there was bargaining/dickering done.

I didn't need anything, but then I guess I did.

 

[ggunn]

Sorry Christi, I didn't get your point, and still don't the way you stated it, but...it could be me and or my perception of what you wrote.. Now myself, I HATE haggling, and leave it to my wife, who loves the practice. How are we to know, where it is acceptable and where it's not?

It's simple. If you ask how much something is, and it's too much in your view, say "no, gracias" and leave. If the merchant follows you and opens negotiations, then it's OK to haggle.

 

[Mike]

I find most place we go offer rate WAY better than 10 to 1. So if we assume most are hovering around 12 to 1, at what rate would you find it an unacceptable exchange rate? You say is isn't 10 to 1. Would 8 to 1 be unacceptable? 5 to 1?

My point is even if 10 to 1 isnt the spot, I have to bet there is a rate you would say is not acceptable. I just happen to think that a difference of 17% MORE than the more common 2.5% or so used by many businesses is excessive and looks bad. I am not worked up about, I just hold that opinion.

Glad you said that instead of me, that's the fault to the 'logic' here. What is the acceptable bending you over rate? To some 10:1 is fully acceptable, but 9:1 would not?

Mexico is a cash economy, people are fooling themselves if you think taxi drivers are running to banks and making deposits.

Pesos and US dollars are freely accepted in a Mexican tourist destination, there is no need for a local to exchange them and they certainly want to avoid recording them as income with a bank deposit. We can have this little fantasy that Mexican taxi drivers are all incurring these huge currency exchange and banking costs and must give 10:1 exchanges as this is the advice their accountants give them, but I think I'll side with the facts, that people in a cash economy do one thing very well, which is avoid turning cash into recordable transactions. I think I'll stick to the facts that mexican taxi drivers find the US dollars they take in spend just as well in the local economy as Peso do.

 

[Christi]

So you are calling me a liar Mike?

Whether they (taxi drivers or ANY MX citizen or local) is depositing the dollars or not, there IS IN FACT a limit on how much they can EXCHANGE or DEPOSIT per month without being taxed on it. ID"S are required to exchange money and it's tracked by computer. That is a fact - I didn't invent it. It is fairly new - maybe about a year - less than 2 years old. It was designed and put into place because of suspected drug money/money laundering I was told.

And yes, I DO deposit USD into my business account so that I can cover things like payroll, gas for the boat, tank fils, insurance, electric bill, phone bill, etc. etc. - no, all of these places DON'T take USD and in order for ANY expense here to be tax deductible - we must have what is called a "factura" which is a tax receipt - these facturas need to correspond with deposits and furthermore, any expense over $2000 pesos MUST be paid with a check or interbancarial transfer so that there is a paper trail and so that people can't get away with calling everything "petty cash". Actually, the government's tax system here is much more sophisticated than you may think or believe...but really, what do I know - I just live and own/operate a business here for 13 years.

Glad you said that instead of me, that's the fault to the 'logic' here. What is the acceptable bending you over rate? To some 10:1 is fully acceptable, but 9:1 would not?

Mexico is a cash economy, people are fooling themselves if you think taxi drivers are running to banks and making deposits.

Pesos and US dollars are freely accepted in a Mexican tourist destination, there is no need for a local to exchange them and they certainly want to avoid recording them as income with a bank deposit. We can have this little fantasy that Mexican taxi drivers are all incurring these huge currency exchange and banking costs and must give 10:1 exchanges as this is the advice their accountants give them, but I think I'll side with the facts, that people in a cash economy do one thing very well, which is avoid turning cash into recordable transactions. I think I'll stick to the facts that mexican taxi drivers find the US dollars they take in spend just as well in the local economy as Peso do.

 

[divingpyrate]

make friends on the island and have them pick you up
Problem solved

Why is the rum always gone

 

[DjDiverDan]

Well I agree with you that is is fine for businesses to cover the expense of their banking issues, however is there a limit? Not the practice, but the degree.

I find most place we go offer rate WAY better than 10 to 1. So if we assume most are hovering around 12 to 1, at what rate would you find it an unacceptable exchange rate? You say is isn't 10 to 1. Would 8 to 1 be unacceptable? 5 to 1?

My point is even if 10 to 1 isnt the spot, I have to bet there is a rate you would say is not acceptable. I just happen to think that a difference of 17% MORE than the more common 2.5% or so used by many businesses is excessive and looks bad. I am not worked up about, I just hold that opinion.

And I agree with using local currency. Respectful of the culture and all that.

Sorry, Chief, while I agree with most of your posts, on this issue I'm on the side of the Taxi drivers. Even setting aside the tax issue that Christi raised, the Taxi drivers have every right to set whatever exchange rate they want, SO LONG AS they make that exchange rate clear up front. Is an exchange rate of 10-1 "reasonable"? That depends entirely upon the circumstances and the desires of who is riding. If you are only in Coz for 1 day off a cruise ship, and all you are going to do is take a cab downtown to window shop and then back to the ship, maybe the extra 50-60 pesos it is going to cost you to pay in dollars is less than the lost time and hassle of waiting in line at a Cambio to change $20 into Pesos. Are there a lot better rates than 10-1? Of course there are, which is why I always change $400-$500 into Pesos at the Banks at the beginning of every trip. But some people don't want to spend a minute of their vacations in a Bank lobby waiting for the next Teller, and don't want to even think about calculating exchange rates. If the posted rate for a taxi ride from the Casa Del Mar to Centro is 80 Pesos, and the Cab driver tries to charge 100 Pesos then THAT is a ripoff. But if the exchange rate he offers on Pesos is a bad rate - if you have the choice to pay 80 Pesos or $8 - then as long as the exchange rate was clear up front (which it is; everyone knows or has the ability to learn that EVERY taxi driver on Coz offers a 10-1 exchange on Pesos for Dollars), I don't see any ripoff. Of course, I also think that anti-gouging laws are generally a very stupid idea for economic reasons. Immediate spikes in price after a disaster, like a sudden rise in the price of electric generators or gasoline after a big storm, are exactly the kind of economic incentives needed to get supplies to where they are scarce. The anti-gouging laws of New York and New Jersey after the huge storm last fall didn't result in a faster recovery; in fact, those ridiculous limitations on rational reactions to markets slowed the recovery by weeks or even months. But I've gotten off subject, so I'll cut short my rant on stupid politicians.

 

[Basscat]

Can't understand the complaints about the exchange rate. It's Mexico, the currency is the peso. If they are nice enough to accept a foreign currency, with the inconvenience to them of exchanging it, rounding to 10 to the US$ seems fair to me. I don't expect a cabbie to carry a calculator and check to the Internet for the current exchange rate. If they give me a fair fare and I'm near the end of a trip and running low on pesos, sometimes I just pay in 10/1 US$ to include a tip, but usually it makes way more sense to me to use pesos while in Mexico. But I do get peeved when they try to give me the "gringo rate", and the earlier example where someone was quoted a fare when getting in, and charged a higher rate before letting their luggage out of the trunk is terrible.