EFAM | Escape From America Magazine

The Cost of Living in Latin America: The Gringo Tax

Gringo Tax

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.

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12 Comments

  1. Eduardo Robinson Olvera October 7, 2009 at 8:57 am

    I’m a cross-cultural, dual citizen with Mexico, although I look like a 100% “gabacho”. Much of what the article says can and does happen at times, but not all the time. I would suggest people follow simple rules, like be respectful and don’t cop an attitude that you expect them to automatically try to “tax” you. Mexicans are very perceptive of one’s attitude towards them. Make all important transactions perfectly clear before parting with money. If you speak good Spanish and know the culture well, that helps a lot. Don’t be an “Ugly American”. Study up a lot before you go.

  2. enrique October 8, 2009 at 9:38 am

    After living many years in Latin America I’ve come to accept these petty ‘surcharges’ in a benevolent philosophical way that avoids stress and makes me feel good.

    Many, if not most day to day transactions are with people just scraping by, on the ‘margin of existence’. The few pesos or colones, they add on might just make the difference between them [or family] eating that day.

    Compared to them, we correctly perceived as w- e – a – l – t – h -y!

    It’s a small price to pay for living inexpensively in nice tropical places, among people who aren’t angry all of the time.

    I’m far from wealthy, [$500 momth Soc.Sec] but I don’t mind sharing and helping out when I can. I only hope for the day their leaders will take the responsibilty to implement govt. sponsored “family planning”. This lack is the root of their impoverishment.

  3. JOE January 29, 2010 at 4:37 pm

    I’m not Mexican, but how does one get away from the damned Gringo altogether. In Spain, they were not even a thought, but I need some other places to get away from the bastards.

    Any idea Appreciated.

    • Beck January 11, 2011 at 11:53 pm

      If you want to get away from the Gringos, you should go to inland China.

  4. Wilbur June 20, 2011 at 7:57 am

    You are the xenophobic one… lumping all of Latin America together and all Latin people together.

    Yes, there are a few bad apples that take advantage of others (ie: gringos) and yes, it is much more common in certain Latin countries than others… there are also some where it almost never happens… spend some time in Colombia, Uruguay and Paraguay before you write something that you apply to ALL of Latin America.

    • Javier December 31, 2011 at 4:08 am

      I’m from Uruguay, and I agree with you

  5. Dan April 10, 2012 at 1:25 pm

    Wayne,

    With things like contruction Cost, Taxis, and Mechanics, you are right. However, with things like flights, Hotels and other items related to the tourism industry, you are wrong. The tourism industry for the most part is simply giving a discount to encourage locals to frequent their establishment or service. These discounts can be had with a local cedula most of the time, reglardless of your contry of origen.

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