The Gringo Tax

bickerss says on Sep 17, 2009, 01:33:

The Cost of Living in Latin America: The Gringo Tax
By Wayne Jeffrey / Sep 09 • Categorized as Living Overseas • Download Print Friendly PDF



Gringo Tax
[Gringo / noun (pl. os) (informal, disapproving) used by Latin American countries to refer to a person from the USA]

Most of Latin America is full of travelers’ delights and people are generally honest, helpful and friendly but when money is involved everything changes. For anyone who has lived in or traveled to Latin America the term “Gringo Tax” will elicit a wry smile. For those of you who don’t know what the Gringo tax is, it’s the amount of money you pay for the same goods or services over and above what a local would pay for no other reason than because you are a Gringo.



It comes in many forms and is extracted in a myriad of ways. From inflated prices for construction work, a taxi driver that takes the long way, overpriced hotel rooms or being short changed in a petty transaction. It seems the Gringo tax is ubiquitous in Latin America. It’s a time honored sport to try and take advantage of the fat, rich, stupid American customer.

Sometimes Gringo taxing is government sponsored and blatant. One state owned airline charges foreigners triple for domestic flights over what a local would pay. If you ask the airline staff why they do this you will get the eye roll and shoulder shrug. Your alternative is to take the bus which cost a lot less is more reliable and comfortable.

Another popular method of price adjustment is when items are listed for sale in local newspapers. The price is rarely displayed. This affords the seller the opportunity to size up a potential buyer. The better you are dressed or exhibit some other sign of wealth the price goes up accordingly. Again, watch out Señor Gringo.

If you live in a small town where you could potentially be a steady customer it is all too common for local businesses and service providers to ask a foreigners to pay a higher price. This is puzzling to the outsider who has money to spend and other contacts to make recommendations to. The short term view, “make a few extra bucks today and don’t worry about tomorrow” is an alien concept to most business people from the US who strive to attract repeat customers.

This begs the question why does it happen? Is it simply because they can get away with it if the opportunity presents itself or are there other more complex reasons?

Cultural differences or xenophobia may account for the main underlying reasons. You are perceived as rich and come from a land of opportunities and they are poor with little chance of bettering themselves. This gives way to the Robin Hood mentality.

It could conceivably be simply a sporting challenge if the person you are dealing with isn’t poor. What could be more entertaining than discussing the latest Gringo slaying with your buddies? This may be borne out of the perception that many foreigners disrespect the culture of their host country and therefore there is nothing wrong with getting them to part with a bit of extra cash.

An influx of foreigners in to a town often has the effect of pushing up prices especially in the real estate market thereby pricing locals out. It is not difficult to understand that this will inevitably cause resentment against the new comers.

Men don’t like it when Latin women prefer foreign men because they have money, treat them better and could be a free ticket to the US. This is a blow to the macho Latin masculine mentality.

All things considered it is not really surprising that the Gringo Tax is levied but it doesn’t mean we have to like it or pay it.

So, how do you avoid the gringo tax?

There are few rules of thumb that if you adhere to will reduce your Gringo Tax liabilities.

Never buy anything that doesn’t have a price clearly marked but even if it does, ask for a discount especially if you are paying with cash.
Always shop around before buying.
Ask other expats where they shop and why.
Make sure you are on the same page as far as currency is concerned. Some currencies in Latin America use the $ sign and are worth significantly less than US dollars.
Check your change immediately after a transaction and certainly before leaving the store.
Befriend a local whom you trust and ask them to get quotes for you or ask for prices.
Avoid using businesses who charge foreigners more whenever possible.
Never get in a taxi that doesn’t have a functioning meter. There are a lot of illegal cabs in Latin America. Know the route you are taking. Watch out for counterfeit bills in your change. You can get pens that will make a black mark on fake bills and a clear mark on the good ones. Avoid taxi drivers that hang out in front of hotels. It’s better to wave one down off the street.
If you are getting some work done on your house always get several quotes in writing and be absolutely clear what is included. You may think materials are part of the quote price and then find out they are not.
Same applies for work needed on your car, get several written quotes. It is not advisable to leave your car overnight with a mechanic you don’t know. It is not unknown for unscrupulous mechanics to make use of your vehicle for their own personal use or change out good major components and replacing them with ones that barely work. The best way to get a good mechanic is by word of mouth from someone you trust who has done business with them before. Never let anyone start doing work before an agreed upon amount is determined before the work starts. Tell them that you will only pay for the work agreed to. Sometimes they will do something that they want to do and expect you to pay for it.
Check your restaurant bills carefully. Genuine mistakes always happen of course but this is another favorite way to target Gringos.
The thing that puzzles me the most about the gringo taxing mentality is the lack of realization that it hurts their business and the country in the long term. They are effectively killing the goose that lays the golden egg. It is sad that the big picture is obscured by resentment and they fail to see that foreigners are bringing in fresh cash to economies that are starved for it. Generally foreigners don’t leech off of the public dole, don’t commit crimes and create jobs. I doubt there really is a quick way to stop this gringo taxing but a good start is to spread the word about it.

Just be aware of friendly strangers with a ‘deal’. Most instances of Gringo taxing are perpetrated on events that will happen in the future. Never pay for anything in advance. Make sure all goods are present and accounted for before payment. Pay for labor after it’s done and you are satisfied with the results.

Every place has good and bad aspects about it. The Gringo tax is only one facet of Latin America and it shouldn’t deter you from traveling there or living there. This is just a heads up for people that may other wise not be as street savvy as they could be. So go ahead and visit Latin America, count your blessings that you are able to do so, but be sure to also count your fingers after you pay someone.

Investment Strategy - buying when others are crying!! Offloading when others are gloating!!!

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bickerss says on Sep 17, 2009, 01:33:

link

http://www.escapefromamerica.com/2009/09/the-cost-of-living-in-latin-a...

Investment Strategy - buying when others are crying!! Offloading when others are gloating!!!

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FELIPEUSA says on Sep 17, 2009, 02:37:

The article is a very good post. The Gringo tax isn't just in Colombia but most everywhere else.

It is funny to read but oh so true.

Success isn't about becoming rich, it's about making your life richer.Faber est quisque fortunae suae

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bickerss says on Sep 17, 2009, 03:19:

yes - it is definetly a ''Latinino-ism''.

Investment Strategy - buying when others are crying!! Offloading when others are gloating!!!

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makopp5 (☼Travelguide writer) says on Sep 17, 2009, 03:35:

soylocombiano says on Sep 17, 2009, 06:14:

On this subject, I'm wondering if anyone knows anything about the launch from Turbo to Capurganá. It was the absolute worst trip I've ever been on. Actually caused some physical damage, and costs 50 bucks round trip. After I made the trip I started to think about that price. You can take a nice big comfortable ride from Athens to Santorini with air conditioned or deck seating, bar, etc. for less, and this is a longer trip.

So, I started thinking, was I subsidizing 90% of the ticket for the 2 chunky locals I was squeezed between? I somehow don't think they were coughing up $50, and this would then fall under the category of blatant state sponsored?

Living well is the best revenge

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chingon says on Sep 17, 2009, 06:21:

You go that right azunoman


For me any thing i need done in Colombia where I am not aware of the price I have my GF do for me or one of my friends... And then after the fact i go back and try to price it myself to see if the gringo tax applies. IF they try to screw me I rail into them and tell them to fuck off

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Bill Turley (Moderator) (Trustee board) (☼Travelguide writer) says on Sep 17, 2009, 06:38:

viajero123 (☼Travelguide writer) says on Sep 17, 2009, 06:43:

chingon says on Sep 17, 2009, 06:48:

Credit cards from USA have no concept of Cuota. I tested this with my AMEX and chase master card... I requested 12 cuotas on separate purchases on each and both times it charged me once..

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miamimike says on Sep 17, 2009, 06:48:

Excellent Article! I've often posted here concerning this transparency issue, Thanks.

Bésame, bésame mucho Como si fuera esta noche La última vez Bésame, bésame mucho Que tengo miedo a perderte Perderte después Bésame, bésame mucho Como si fuera esta noche La última vez Bésame, bésame mucho Que tengo miedo a perderte Perderte de

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kenblanquito says on Sep 17, 2009, 07:04:

bickerss
Excellent post for new immigrants and tourists.
With time one learns about these things and the most important thing is to have reliable contacts who are Colombian.
For the first couple of years here, any significant purchase was carried out by my Colombian wife. Sometimes as a matter of interest, my wife and I would behave as if we were not together and she would ask the price of an item after I had done the same. When there was a difference (generally up to 15%), she would make the seller aware what we had done and she would give same a good lecture about honesty and reputation. There were honest ones though.
Certainly with regard to buying property, I would pose as her "advisor" until the price was known and then it would just so happen that I would be her husband as well.
With the considerable amount of renovations carried out to our present property, fortunately we have a brilliant architect friend who organised the quotations from the subcontractors, bargained with them and received all quotations in writing with all materials included. He also acted as our quality control official and visited the house every week to ensure that no short cuts were being made. He ensured also that the only money paid up front was for materials that were to be used the following week and totally avoiding any payment up front was impossible. Labour charges were paid weekly.
Now that I am more accustomed to this culture, if I feel that I may be about to be exploited, I ask direct "is that a Gringo price or a price for a Colombian" and say that my wife is a Paisa even if I am not. Quite often I receive an expression of horror and the price "coincidentally" drops by 10% or so. Now, I just haggle with everybody and it does work very well, particularly if one is buying in bulk or is a regular customer.

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dguittar says on Sep 17, 2009, 07:20:

It is amazing with all of this Gringo taxation, that we have any money left at all. In fact, all of the international trade is probably loaded with the Gringo Tax. U.S. imports from Colombia were U.S. $14 billion, up 35%. Colombia's major exports are petroleum, coffee, coal, nickel, cut flowers, and bananas. The United States is Colombia's largest trading partner, representing about 37% of Colombia's exports and 29% of its imports.
We lose money on every deal, but we make up for it with volume!

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span_colombia says on Sep 17, 2009, 08:20:

I tend to pay less for stuff than my colombian friends...

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quantum says on Sep 17, 2009, 12:29:

"I tend to pay less for stuff than my colombian friends". Hahahaha........I bet they get so tired of hassling with u that theyre ready to give u the thing just to get u outta there, jejeje.......

quantum

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coastalad says on Sep 17, 2009, 16:33:

I know I have paid a tourist tax at times in less developed countries and sometimes it bothers me, sometimes not.

If you get a rough idea of the most important things (taxis and beer) from the start of the journey it makes life easier. Also understanding numbers in Spanish perfectly helps a lot.

Despite always travelling on a backpacker budget at best I really don't care if I pay a little more at times than the local next to me. Knowing that I sat on my ass for a cpl of hrs and he slaved away for a week for the same amount of pay, I really cant worry about the little things.

The argument can also be put that why do the people in Latin America earn a lot loss when many are smarter and work harder than us(different argument all together I know!) I say a gringo tax seems like a fair deal to me, all within reason ofcourse!

always avoiding white picket fences

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manINred says on Sep 17, 2009, 17:01:

But on the other end of the spectrum, the market is truly free, you can haggle anything down in price. It's a two-sided coin.

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fred911 says on Sep 17, 2009, 17:40:

I say a gringo tax seems like a fair deal to me, all within reason ofcourse!

To me its discriminatory and raciest. When they try that crap on me, depending, I usually walk. To me those people are scumbags and stupid. The type that have no ability to think about tomorrow. I tell them also. Hey bud, you gained an extra .500 but no more in the long run you loose. I wont buy here again.

There's too many good honest store owners with good prices, products and service. The winners. Screw the scalpers.
Nothing personal.. I just vote with my money, and you got a no vote. Best thing to do is know the price and tender what you know it costs. That really messes with um.

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coastalad says on Sep 17, 2009, 17:56:

fred911, youre a tight ass.. open your wallet and and be happy you have the fortune to earn a decent wage, When they try that crap just try some crap back, shoot the shit with them, they love it.....

scumbags and stupid people: those who come to a dam cheap country and are pissed they are paying a few cents more for something that costs 3 times the price in their home country!

always avoiding white picket fences

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span_colombia says on Sep 17, 2009, 18:18:

well I've loosened up, but I hate the feeling that I'm paying too much for something.

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fred911 says on Sep 17, 2009, 18:31:

coastal: why yes I am:-) But I don't mind paying more to someone who either deserves it, provides a better service or is just plain nice (just a little more). I guess what makes me mad with some of the sales people is they think they're getting over.

One day I took a taxi he had an attitude to begin with when exiting | asked him how much? I knew how much, 3.100 he told me it cost 5.500. I politely asked to see the card, his license as he flew out of the car and got in my face being aggressive and vulgar. I kept my cool for a bit, but I don't appreciate that type of behavior. I told him the meter shows the minimal fee, and i'm not paying you 1 peso over, you get nothing. This is at 5th and Jimenez, just as he says I'm going to call the police two of the local cops ride by (CAI is right down the block). They stop and ask what the problem is. He goes on and on how this gringo doesn't want to pay him, and all the while I have money in my hand so the cops can see there's more. The cop asked my what the problem was and I told him all I did was to ask for the card and he came unglued, for I knew how much it costs. Cope said bien.. es el todo problema? Si.. quiero cancelar pero no mas de la normal vuelta. The cop asks the driver for the card, brings it to me and asks me how I know the price, I show him he says great pay that and have a good night. My date and I start walking home as the cops do the document check with the driver. My friend complimented me on my dealing with the police. I can only compliment the cops for doing the right thing.. Doesn't always happen that way. But thats a perfect example of being gringoed, good thing there was a meter. then again, I never consume or use service that I dont know UPFRONT how much it costs. EVERYTIME they will screw you..

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coastalad says on Sep 17, 2009, 20:13:

fair point fred, I can understand your view in situations like this!

always avoiding white picket fences

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soylocombiano says on Sep 18, 2009, 07:23:

coastal--I see that you live in Canada, which takes away a little of your credibility. Anyone living and working here should pay the same price as anyone else would pay.

Living well is the best revenge

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Pappassito (☼Travelguide writer) says on Sep 18, 2009, 08:09:

lpdiver says on Sep 18, 2009, 15:41:

Any gringo who thinks they have never paid the gringo iva in Colombia is clueless. You can hold it to a minimum...but there are so many ways to get taken it is impossible to cover them all

Pappasito...I have solved my getting change problem. It is a sort of minor diversion for me. I can't stand a vendor not having change; so I make sure to have it down to the peso. At Monserrat I purchased a small "man purse" from one of the vendors.

It is a tooled leather "coin purse". It is roughly the size of a wallet and has a cover that folds over and snaps securely. In it I keep a small laminated card with all my friends and relatives in Colombia and their addresses and phone numbers. This is my back up as I have all that info in my cell phone as well. I also carry a neatly folded copy of my passport in it and maybe 100,000 to 200,000 pesos in big bills and lots of small bills. Along with my daily rations of beggers change I am pretty well armed for the day.

My colombiana has sewn a small pocket inside my jeans behind the watch pocket. This is where I keep my ATM card.

Just something to consider.

ts

Remember what the monkey says, "Fuck money it's free"

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kenblanquito says on Sep 18, 2009, 17:10:

lpdiver, you sound as cautious as me so hopefully you will have a good or even eternal run. I would suggest placing the notes somewhere else though. That way you can show your ID without displaying serious cash and "plain clothed" police who are not, do operate here. I like the idea for your ATM card!
I like to obtain my full change too; that way I can give it to the poor that I choose because the average shopkeeper/cab driver will not give it away, will he/she? In the course of a day, their lame excuses probably mean a few thousand Pesos extra profit which is serious cheating.

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lpdiver says on Sep 18, 2009, 17:17:

Over the years I have spent close to eight months in Colombia ( travelling there since 2003). I have never been asked for identification outside of an airport. I did screw up once in Medellin by accidentally flashing a couple of million pesos and was targeted very quickly. I managed to extricate myself and retain my cash. I have been much more careful since.


Eternal run...never happen. I just try to not carry more than willing to lose.

Another reason I like to have the correct change is to avoid recieving counterfeit note and the embarassment that happens when unknowingly passing them later and being "caught".


ts

Remember what the monkey says, "Fuck money it's free"

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soylocombiano says on Sep 19, 2009, 19:29:

Coastal, I've had a little time to rethink my previous statement and I can only say that I'm very, very sorry for my rash words, and didn't mean any disresepect whatsoever.

I'd like to introduce myself and say that I've been in Colombia for many years and have traveled throughout the country both by plane and by motorcycle. I speak almost fluent Spanish and I know where it's safe and where it isn't, and I could obtain for you whatever you desire at the correct price.

The next time you want to come to Colombia, please PM me, and I'll meet you at the airport ready, willing, and able to make sure that you're treated to whatever desire you might have.

Siempre a la orden para usted, Don Coastalad

Living well is the best revenge

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ColombianBound says on Sep 23, 2009, 01:37:

Walk downtown Bogota, by the strip of emerald/jewelery dealers, you'll see what "gringo tax" is all about. I wasn't even aloud to be seen walking with my girlfriend and her brother if I had ANY intention of buying from any of those stores.

"The good die young"... so get out and live.

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