| | |  News Around the Republic of Mexico | October 2009 
Mexico's PRI Debates VAT Plan as Deadline Looms
 Jason Lange & Miguel Angel Gutierrez - Reuters
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October 29, 2009
Mexico City - Senators from Mexico's main opposition party met for a third straight day on Wednesday to debate rejecting a government proposal to raise consumption taxes as a deadline to pass the law loomed.
Lawmakers from Senate committees were due to meet with Finance Minister Agustin Carstens following the meeting to discuss the proposal.
Senators from the centrist Institutional Revolutionary Party, or PRI, have spent the week mulling conservative President Felipe Calderon's proposal to hike taxes as a way to reduce Mexico's dependence on revenues from waning oil output and avoid a looming credit rating downgrade.
Congress by law has until the end of the month to pass the measure, which is part of a larger tax package in the 2010 budget.
A watered-down version of Calderon's bill cleared the lower house of Congress last week. The PRI rejected a new sales tax that would hit currently exempt food and medicine, but accepted a government counterproposal to raise the value-added tax, or VAT.
Mexico's peso has weakened about 3 percent since Thursday as investors worry about threats by PRI senators to kill the VAT hike, which could make a threatened rating downgrade more likely.
On Wednesday, the peso slipped 0.28 percent to 13.28 per dollar.
Mexico's central bank said in a report released on Wednesday uncertainty surrounding the tax debate makes it too difficult to forecast growth and inflation for 2010.
The bank said economic growth in the future will be slower than levels achieved before the global economic crisis.
Sen. Manlio Beltrones, who leads the PRI in the Senate, on Tuesday left open the possibility his party could approve the sales tax measure, though a party representative said earlier that powerful PRI forces were pushing for its rejection
(Editing by Chizu Nomiyama)
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