The Washington Post

In Mexico, you can pay taxes with art

“The Love Embrace of the Universe,” a 1949 painting by Mexican artist Frida Kahlo.

Antonio “Gritón” Ortiz hasn’t paid taxes to the Mexican government in 28 years. Why? Because he’s an artist.

It all started in 1957, wrote Eva Hershaw of the Atlantic:

David Alfaro Siqueiros, 73, Mexican muralist, painter and activist, is shown in Mexico City, Mexico, on Sept. 10, 1970. (AP Photo) David Alfaro Siqueiros, 73, Mexican muralist, painter and activist, is shown in Mexico City, Mexico, on Sept. 10, 1970. (AP Photo)

“As legend has it, muralist David Alfaro Siqueiros, one of the most influential artists of his generation, approached the secretariat of finance in 1957 with a proposal to keep a friend and fellow artist out of jail for tax evasion: Let him pay his debt in art.”

Since then the Mexican government has collected 7,000 paintings, sculptures, and graphics from Mexican artists through the Pago en Especie, or payment-in-kind program.

Artists who sell five or fewer pieces per year may give one piece to the government. Artists who sell six to eight pieces may give two and so on, until the six-piece donation cap is reached.

But not just anybody qualifies. “A 10-member jury of artists ensures that no one tries to unload junk,” José San Cristóbal Larrea, director of the government’s Cultural Promotion and National Heritage Office, told Foreign Policy.

It’s a pretty generous deal considering the country is hemorrhaging what little money it collects from its citizens.

According to the New York Times, the Mexican government “currently collects just 10.6 percent of the country’s annual economic output in taxes, less than almost any other country at its level of development.”

The Mexican economy loses billions every year – $872 billion between 1970 and 2010 – because of “illicit outflows” such as money laundering and tax evasion, according to a 2012 study from the advocacy group Global Financial Integrity.

Though Mexican President Enrique Pena Nieto promised an overhaul of the country’s tax code, which is riddled with loopholes, the Pago en Especie program was untouched by the moderate reforms that were ultimately passed.

Perhaps that’s because officials don’t consider the program to be a loophole. “We’re helping out artists while building a cultural inheritance for the country,” Larrea said.

The best works end up in the national heritage collection, a permanent exhibit in Mexico City. The rest are displayed in other museums and public buildings.

While no other country has a payment-in-kind system such as Mexico’s, many significantly subsidize film and other art forms, and some offer tax breaks to artists or to collectors who donate significant works.

Gail Sullivan covers business for the Morning Mix blog.



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