Representatives of business organizations in northern Mexico on Monday rejected President Enrique Peña Nieto's proposal to increase the value added tax rate from 11 percent to 16 percent in regions that border the United States.

"The increase of five percentage points in the tax will mean a real increase of 45.5 percent with a heavy impact on prices of products and public services subject to this levy," groups in the states of Baja California, Baja California Sur, Coahuila, Chihuahua, Sonora and Tamaulipas said in a newspaper ad.

Firms along Mexico's northern border compete "every day with the strongest economy in the world," the ad said.

Currently, the VAT in Mexico's northern and southern border regions is lower than in the rest of the country, and if the initiative is implemented both those zones would be brought into line with other areas.

"We reject the argument that the (current) differentiation implies 'privileges' that in no way have benefited either the country or the residents of the border strip since this stance shows a lack of understanding of the reality that prevails in this zone of Mexico," the ad said.

Those signing the message noted that in the United States the sales tax ranges from 6 percent to 8 percent, and so raising the VAT on the Mexican side would place them at a "great disadvantage," as it would encourage area residents to do their shopping north of the border. EFE