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 News Around the Republic of Mexico | July 2007 
Mexico's PRD to Work on Tax Bill, Defy Lopez Obrador
 Patrick Harrington & Adriana Arai - Bloomberg
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| | Lopez Obrador, who lost the July 2006 presidential election by less than 0.6 percentage point to Calderon, staged two months of street protests in an effort to overturn the result. |
Mexican lawmakers from the opposition Party of Democratic Revolution say they're ready to work with President Felipe Calderon on his proposal for a new tax code to create a system that's fairer and boosts revenue.
The deputies, in agreeing to bargain with the government, are defying the leadership of losing presidential candidate Andres Manuel Lopez Obrador, who on July 1 urged "zero negotiation" with Calderon.
Deputy Juan Guerra, 52, said in an interview that lawmakers from his party, known as the PRD, have a responsibility to seek the best tax plan possible and ensure it doesn't unfairly burden the poor. The party, the second largest in Congress, will meet tomorrow to complete its own tax proposal, which will guide negotiations, he said.
"We're here now, working," Guerra, a member of the lower house Finance Committee, said yesterday during a break in hearings on the tax legislation. "Our responsibility is to seek out accords that are the best for the country."
Lopez Obrador, who lost the July 2006 presidential election by less than 0.6 percentage point to Calderon, staged two months of street protests in an effort to overturn the result. A federal court rejected Lopez Obrador's claims of election fraud.
Alternative Tax
Guerra said the legislative coalition led by the PRD, which includes the Workers Party and the Convergence Party, will propose a plan that reforms Mexico's current income tax. Calderon would require companies to pay the higher of two taxes -- a new levy of as much as 19 percent on revenue minus investment and cost of inputs, or the existing 28 percent tax on net profit.
Such an alternative tax would unfairly burden small and medium businesses by limiting deductions, he said.
"Our initial proposal is that Congress takes up again discussion of how to fix the current income tax," he said. "But if they don't want to do that we are going to have to fight to ensure that their attempt to apply new taxes doesn't discourage economic growth."
Other PRD legislators said they can't reject Calderon's plan because it addresses the same fairness issues that form their party platform.
Fight Poverty
"The alternative minimum corporate tax is a step in the right direction because it would force companies that aren't paying taxes to pay them," deputy Luis Sanchez, a spokesman for the PRD in the lower house, said in an interview in Mexico City. Former presidential candidate Lopez Obrador is not in a position to order the party to stop negotiating, Sanchez said.
"I don't think Lopez Obrador has a majority in the national board meeting," he said.
Before a congressional hearing yesterday, members of the Institutional Revolutionary Party said they would seek to change the proposed corporate tax.
"Some harmful things will be taken out and more reasonable things will be added," Jorge Estefan Chidiac, president of the lower chamber's finance committee, told reporters.
Calderon, speaking today at conference on rural development in Mexico City, urged business leaders to help fight poverty and to not just focus on making profit.
"The work of businesses should go beyond just the sphere of business," Calderon said, according to a transcript on the presidential office's Web site. "In addition to pursuing financial ends, companies also have a great responsibility to society."
To contact the reporter on this story: Patrick Harrington in Mexico City at Pharrington8@bloomberg.net. |
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