| | |  News Around the Republic of Mexico | October 2009 
Mexico Tax Reform Debate
 Patrick Rucker & Michael O'Boyle - Reuters
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October 07, 2009
Mexico City - Mexican lawmakers are debating President Felipe Calderon's proposal to raise taxes and lower the government's dependence on Mexico's declining oil industry.
Calderon is trying to head off a threatened downgrade of Mexico's debt rating, but the conservative leader needs support from the opposition to pass his proposal.
The cornerstone of the plan is a new 2 percent sales tax on all products, including currently exempt food and medicine. Calderon also wants to raise income taxes.
Congress has an official deadline of Oct. 31 to pass new tax measures for next year.
The following are the latest developments compiled from Reuters stories and Mexican media reports:
• Leaders of Calderon's conservative National Action Party, or PAN, said they are willing to make basic foodstuffs and everyday medicines exempt from the new tax, local media reports.
• The main opposition Institutional Revolutionary Party, PRI, is working on a proposal to replace Mexico's income tax and alternative minimum tax with one tax that eliminates exemptions, daily Reforma reported.
Lawmakers are also discussing a modified version of the 2 percent sales tax that would include certain exemptions.
• Calderon warned in a speech on Monday that the federal government will not dole out more money to Mexico's 31 states or increase social spending without closing the budget gap.
• A new levy on mining output could be used to help close the budget gap under one plan floated by the PRI. For details see [ID:nN30209338].
• Lower house deputies from the PRI and the left-wing Party of the Democratic Revolution (PRD) have said they will meet deadlines that require tax changes to be approved by both houses of Congress before the end of October and the entire budget by Nov. 15.
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