Dealing with Cuenca’s Gringo Tax

Dealing with Cuenca’s Gringo Tax – Transcript

Jason    00:01

Hola, today we’re talking about all things gringo tax, including some tips on how to avoid it. Vamos.

Jason    00:08

Jason from YapaTree here. YapaTree is Cuenca’s source of detailed boots on the ground information. We have a strong real estate division Two. Today’s video is somewhat of a delicate topic. Gringo pricing or gringo tax is something that you would hear a lot of expats complain about wherever you end up living in the world. We’ll get into some specific gringo tax examples and our suggestions for limiting how much this affects you.

Jason    00:32

But before we get there, I do want to address something and that is the name Gringo Tax. This does great on me a lot because it is a misrepresentation of the core overpricing issue and by labeling it as something that only affects gringos, we’re putting ourselves at the center of this issue and I think by doing so over emphasizing how much this actually affects gringos or expats in general. Now, I’m not debating that gringos do get charged more in certain circumstances, but what normally gets omitted from this conversation at all the other groups that are also subject to being overcharged.

Jason    01:08

This includes expats from other Latin American countries such as Colombia, Peru, and Venezuela. And importantly, anyone that sounds like they are from another city in Ecuador also goes through very similar issues. Take my partner Michelle. She’s from Quito and speaks native Spanish. But she is not from Cuenca and this is very clear to Cuencano’s, so she faces the very same overpricing issues as gringos. The main difference is that she understands the negotiating culture and can call someone out on their overpricing BS and still maintain a calmness that can cut through it and we generally end up paying the standard price.

Jason    01:47

We can even take it down to the local level as two different Cuencano’s can also be charged different prices depending on how they look. The local saying for this is “va de acuado a la cara del pato” and the little translation is something like “goes according to the face of the duck”. So according to the saying, different ducks get charged different prices depending on how their face looks. The central assumption here is that the closer the buyer looks to the seller, the more the seller trusts the buyer, has the same knowledge as them and subsequently offers them better pricing.

Jason    02:22

For example, if we take the market context, a lot of store holders are from indigenous communities. Therefore according to this saying, they are more likely to give better pricing to indigenous locals. And so whilst this phenomenon does seem to exist on numerous levels here in Cuenca, I do believe a much more accurate name for it is out of town tax or out of town pricing. As the core issue stems from shops and service providers recognizing an accent or other physical attributes that clearly point to the buyer being from somewhere else and then they assume that they don’t know the standard pricing in Cuenca.

Jason    02:59

Thanks for indulging my little rant. Now that we’ve established a slightly less gringo centric name, let’s get to some specific examples where out of town pricing can occur. Taxis. Taxis and the good old tourist route to get somewhere. I’m sure you’ve come across this one in your home country too. The good news is that taxis in Cuenca are really cheap, so whilst I’m not condoning overcharging, the overall impact on your wallet is generally trivial. The minimum fair in Cuenca is $1.50 which increases to $1.75 after six PM. And no, tipping is not mandatory, but rounding up is common.

Jason    03:34

Restaurants. In my experience, most restaurants here are honest and prices are normally easy to find on menus etc and so you know exactly what you’re paying for ahead of time. Some restaurants at the higher end do automatically include a service charge which can be a little bit of a surprise and this fee does normally go to the owners, not the service staff, so maybe take this into consideration if you are going to try and tip your server. And yes, there are absolutely some English speaking restaurants in Cuenca that focus on expats as their core audience. And sure, some of these do charge more than other restaurants and cafes. But whether you consider this gringo pricing is really up to you. My view on it is that these cafes and restaurants are providing a different type of food and quality at a specific price point. And to me this is not gringo pricing. If they were charging locals less than sure that would be a very different story.

Jason    04:28

Fruit and vegetable markets. This is perhaps the best place for you to start learning how to negotiate with Cuencanos. Displayed prices are rare, so it’s very easy for them to inflate them a little bit. But it is not a one way street. You’re very welcome to push back a little bit, and provided you do it in a positive and fun manner, you do not need to worry about offending anybody. You can even ask for a little yapa, or something extra, and perhaps you’ll walk away with a little more than you were expecting, rather than feeling like a victim that’s been overcharged.

Jason    05:00

Real estate buying and renting. Yapatree operates a real estate division, so we’re very close to this one. And unfortunately it is common for other agents to do whatever they can in order to gain some quick money. This can range from the obvious, like trying to rent or sell a property above the market price in the hope of attracting an oblivious gringo as a buyer or rent. But we also routinely see its surface in less obvious parts of the transaction. For example, when you buy a property, it’s often good practice to create a promissory note which sets forth all the key terms of the deal. Its core purpose is to protect the deal, and it is important, but some agents will push you towards using their favorite attorney for this, who charges a significant amount to draft the promissory note. These inflated costs are passed on to the buyer and the property agent gains extra commission because of the padding added to these prices.

Jason    05:54

Like other instances of out of town pricing, your best bet to fight against this is to know the market prices for every activity involved in the process you’re pursuing. In this instance, you should really have a good understanding of the true closing costs. And yes, using a quality agent that you can trust is critical to getting the best results too. Especially if you aren’t familiar with the local costs or processes.

Jason    06:18

Visas. This is a bit of a tricky one because the very nature of the business means the main audience they serve are from out of town. Sure, there are some returning Ecuadorians or those with gringo spouses that also need assistance, but these are small audiences for Ecuador visa providers. So no, I can’t say that visa providers gringo price exactly because they don’t generally serve locals and therefore cannot charge them less.

Jason    06:42

But on the other side of the coin, I am a qualified lawyer and have a good understanding of common fee structures and strategies used here, and you don’t need to look far to see that some visa providers are charging considerably more given the amount of work involved in many visa applications. To make matters worse, there can be a perception that paying higher fees equals higher service. This is dangerously wrong and please see my previous video on visa myths as to why. So even though visa providers may not technically gringo price, there are still considerable pricing issues that I would suggest you research before making any sort of financial commitment to a visa facilitator or attorney.

Jason    07:22

Cars. I know, I know, if you like the majority of expats moving to Cuenca, you’ll probably stick to public transport, but for those that do like to venture outside of Quanca, a car can be very helpful, but it’s also a huge minefield with lots of issues that can trip you up.

Jason    07:37

Lots of Cuencanos prefer to sell their car without a price. The idea is that you’ll call them and then they can sell you over the phone. This type of verbal negotiation over the phone is also where many expats, myself included, tend to struggle the most. And for this reason it can be a very good idea to engage a trusted local to help you negotiate when purchasing a used vehicle. The website Patio Tuerca is the best local resource to find the market rate of cars, and it’s where I would generally recommend you start with your research on car prices.

Jason    08:09

Now that we’ve explored some examples, let’s discuss strategies for navigating the out of town tax in Cuanca. One – Know your prices. Don’t be afraid to shop around and compare prices. This can help you identify any significant price differences and ensure that you’re getting a fair deal. Getting your pricing information from current experts living in Cuenca is fantastic, but to really know the market, I always suggest asking locals what they pay and where.

Jason    08:35

Two, Embracing the local culture. Showing genuine interest in the local customs and tradition is very important. Expecting locals to bend over backwards to learn English so they can negotiate with you is just not going to happen anytime soon. So learning a few basic phrases in Spanish and demonstrating respect for the local culture can foster positive interactions and potentially reduce the impact of this out of town tax.

Jason    09:01

Three – Seek recommendations from locals. They live here and you’re a visitor. You’d be a little bit silly if you didn’t take advice from locals. It won’t only result in better recommendations, but can also lead you to authentic experiences and insights on where to find fair prices.

Jason    09:18

Four – Consider supporting local businesses. I get that it can be more convenient to buy stuff online and have it mule down from the US and I do this on occasion too, when I genuinely cannot find what I need from local suppliers. But shopping at local markets, dining at neighborhood restaurants, and engaging in local activities really does help your new local community thrive. You’ll quickly start to develop your own pricing benchmarks to helping you be better prepared for your next visit.

Jason    09:45

Now you have some strategies for navigating the out of town tax. Let’s explore why saying no to paying more is important. For this, I like to use places like Costa Rica as a little bit of a cautionary tale. Go ask expats that have lived there for 10 plus years or more what they have gone through and they’ll likely tell you that the cost of living has increased a lot. Obviously this affects expats like retirees on fixed incomes, but also seriously affects the local economy as you have this increased inflationary pressure which results in everyone paying higher prices for everything.

Jason    10:20

If a similar trend picks up in Cuenca then locals will suffer the most as many are struggling to make ends meet as it is and can be priced out of the market for even the most basic of necessities. But it is also important not to be paranoid about this issue. I’ve seen numerous expats post where they’ve been charged twenty five cents. Extra for something and they’ve blown it way out of proportion. Getting shortchanged 25 cents could just be an honest mistake that is normally quickly rectified once you pointed out to the cashier. And just because you were charged a little bit more than you think is appropriate doesn’t automatically mean that you’ve been gringoed.

Jason    10:58

Enjoying this video. Please don’t be shy and hit that like button. It really does help our message reach more people. Before you wrap up, I’d like to share some positive experiences recommendations from a time in Cuenca. Despite the out of town tax, there were plenty of places that offer fair and affordable pricing, catering to both locals and travelers. And by exploring these local markets, eateries and establishments, you can discover incredible experiences without feeling overwhelmed by the additional charges.

Jason    11:25

Not sure where to start? YapaTree operates a membership card program where you get offers from around 50 different businesses in Cuenca. Some are small businesses like cafes and restaurants, while others are much bigger like Italdeli and Coral. I’ll provide a link to this in the description and I’ll also provide links to our other services such as buying and renting properties.

Jason    11:46

And that’s all for now. I really hope that you’re better armed to deal with the out of town tax in Cuenca. And remember, by understanding the local dynamics, embracing the culture, seeking recommendations and supporting local businesses, you can enjoy an authentic and budget friendly experience in this gorgeous city. Thanks for watching. And remember, don’t forget your Yapa!