| | |  News Around the Republic of Mexico | October 2009 
Mexico Tax Reform Debate, Proposals
 Jason Lange & Patrick Rucker - Reuters
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October 15, 2009
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.
Lower house lawmakers must approve any tax changes by Tuesday to meet a statutory deadline.
The following are the latest developments compiled from Reuters stories and Mexican media reports:
• On Wednesday, a leading Mexican newspaper, Reforma, reported that leaders of the opposition Institutional Revolutionary Party (PRI), whose support is crucial to pass the tax package, will reject Calderon's proposal for a new 2 percent federal sales tax. But the paper added that the PRI will support Calderon's proposal to hike taxes on telecommunications but with a lower rate.
• PRI leaders met Monday night to consider its position on the tax proposal but "there is still no agreement" within the party, said Francisco Rojas, the party leader in lower house of Congress, local media reported.'
• The PRI has said they want to deepen spending cuts by cutting back on bureaucrat salaries while still boosting spending on infrastructure.
• Opposition parties plan to raise the average oil price projected in the 2010 budget by several dollars to increase expected income and ease the need for new taxes. Calderon's proposal counts on less than $54 per barrel, while many analysts see oil prices averaging closer to $60 per barrel.
• The left-leaning Party of Democratic Revolution, or PRD, on Monday proposed eliminating some tax deductions for company investments while raising capital gains taxes. The PRD is the third-largest party in the lower house.
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