Thanks for this--you capture the complexities well. I think that a digital nomad taxation probably isn't the solution. Aside from the difficulties of enforcing it, I do think it ultimately sends the wrong message to a population of people that can, as you say, simply go somewhere else instead. One way many American cities are dealing with such issues--though unintentionally--is with zoning for Short Term Rentals (STRs e.g. AirBnB). Cities (or neighborhoods within cities) will either have a lottery system for permits to operate an STR, or (as where I live) forbid them entirely. Therefore it would be quite difficult for a digital nomad to set up for 90 days in my town. (Although I am surrounded on every side by equally populated cities that allow them.)
Another question I have is this: whenever a government talks about additional taxation, I wonder 1) where will this money go? and 2) do you not already have enough? You mention that DNs use the roads and other public services just as residents do. But which taxation streams do the government already use to provide such services? If it's largely property taxes, then the DN is already contributing to the income of the STR property owner and ultimately *is* paying the property tax, and therefore for the infrastructure they're using.
Let's say, hypothetically, that the infrastructure is not very good. (I've been the Mexico City briefly, but I don't remember remarkably bad roads etc. while I was there like there are in Cuba, for example.) Then the government needs to invest in the infrastructure, which costs money which is made by taxation. How much money are they already earning? With sales tax at 16%, probably a fair amount. So the question then becomes what are they already spending money on that they don't need? At least in most countries I've spent any length of time (UK, USA, Spain) it seems a lot of tax money goes to waste and/or is used mightily inefficiently.
Perhaps, instead of creating an extra tax, it is possible to achieve what needs to be achieved while actually lowering taxes. Combine that with some restrictions on STRs and rent control, and you've got a scenario where the cost of living goes down for local residents, DNs are still incentivized to stay in the area, and their negative effects are minimized whilst their stimulation of the local economy is maximized.
As you say, this is of course more complex than that. But I believe the above represents a line of thinking I'm not seeing national or local governments explore, which is a shame, in my opinion.
I can't imagine how it could be enforced. I think the tourist visa should be changed to 90 days and residency required for DNs. We have been searching for a place to live for nearly a year and it's just next to impossible because of Airbnb and DNs. I'm a PR and my novia is local but everything is budgeted out of the range of local salaries. This will hollow out entire neighborhoods of actual Mexicans. We walked through Condesa and Roma Norte yesterday and it was like being in Europe.
As soon as I started reading this I thought of NAFTA and how it compared and then -- BOOM! -- you brought up the topic.
As you ultimately conclude, this is a very complicated topic with no easy solutions, but I applaud you both for bringing it up and for discussing it with such logic and the lack of hyperbole that so often swirls around the subject of digital nomads these days.
Thanks for this--you capture the complexities well. I think that a digital nomad taxation probably isn't the solution. Aside from the difficulties of enforcing it, I do think it ultimately sends the wrong message to a population of people that can, as you say, simply go somewhere else instead. One way many American cities are dealing with such issues--though unintentionally--is with zoning for Short Term Rentals (STRs e.g. AirBnB). Cities (or neighborhoods within cities) will either have a lottery system for permits to operate an STR, or (as where I live) forbid them entirely. Therefore it would be quite difficult for a digital nomad to set up for 90 days in my town. (Although I am surrounded on every side by equally populated cities that allow them.)
Another question I have is this: whenever a government talks about additional taxation, I wonder 1) where will this money go? and 2) do you not already have enough? You mention that DNs use the roads and other public services just as residents do. But which taxation streams do the government already use to provide such services? If it's largely property taxes, then the DN is already contributing to the income of the STR property owner and ultimately *is* paying the property tax, and therefore for the infrastructure they're using.
Let's say, hypothetically, that the infrastructure is not very good. (I've been the Mexico City briefly, but I don't remember remarkably bad roads etc. while I was there like there are in Cuba, for example.) Then the government needs to invest in the infrastructure, which costs money which is made by taxation. How much money are they already earning? With sales tax at 16%, probably a fair amount. So the question then becomes what are they already spending money on that they don't need? At least in most countries I've spent any length of time (UK, USA, Spain) it seems a lot of tax money goes to waste and/or is used mightily inefficiently.
Perhaps, instead of creating an extra tax, it is possible to achieve what needs to be achieved while actually lowering taxes. Combine that with some restrictions on STRs and rent control, and you've got a scenario where the cost of living goes down for local residents, DNs are still incentivized to stay in the area, and their negative effects are minimized whilst their stimulation of the local economy is maximized.
As you say, this is of course more complex than that. But I believe the above represents a line of thinking I'm not seeing national or local governments explore, which is a shame, in my opinion.
I can't imagine how it could be enforced. I think the tourist visa should be changed to 90 days and residency required for DNs. We have been searching for a place to live for nearly a year and it's just next to impossible because of Airbnb and DNs. I'm a PR and my novia is local but everything is budgeted out of the range of local salaries. This will hollow out entire neighborhoods of actual Mexicans. We walked through Condesa and Roma Norte yesterday and it was like being in Europe.
As soon as I started reading this I thought of NAFTA and how it compared and then -- BOOM! -- you brought up the topic.
As you ultimately conclude, this is a very complicated topic with no easy solutions, but I applaud you both for bringing it up and for discussing it with such logic and the lack of hyperbole that so often swirls around the subject of digital nomads these days.