| | |  News Around the Republic of Mexico | November 2009 
Mexico Fiscal Changes ‘Band-Aid’ Solution, Fox Says
 Joshua Goodman - Bloomberg
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November 03, 2009
| | Former President Vicente Fox (UPI/Brian Kersey) | |
Mexico’s fiscal changes are a “Band- Aid” solution that won’t contribute to long-term economic growth and competitiveness, former President Vicente Fox said.
“Once again we lost the opportunity to implement the reforms Mexico needs to be on the path of sustainable development,” Fox, a member of President Felipe Calderon’s National Action Party, told reporters today in Washington.
Fox said changes in taxes and spending approved by congress over the weekend were “incomplete and partial” and didn’t address the “desperate” situation stemming from a lack of private investment in the country’s oil industry. He said Mexico needs a generalized sales tax of 15 percent, without exemptions, and must reduce the income tax rate to the same level.
In the 2010 budget, Mexico’s congress passed a watered-down version of Calderon’s plan for offsetting the effect of declining revenue from oil. It includes raising the income tax for high-earning individuals as well as corporations to as high as 30 percent in 2010 to 2012, before dropping to 29 percent in 2013 and returning to 28 percent in 2014.
Lawmakers on Nov. 1 voted to increase the sales tax to 16 percent from 15 percent instead of adopting the administration’s 2 percent consumption tax proposal, which would have generated more than double the revenue, according to the government.
“If we continue denying Mexico the solutions it needs and implement Band-Aid solutions instead, small changes, we’re not going to get ahead,” he said. The tax changes approved by congress “only serve to partially plug holes.”
To contact the reporters on this story: Joshua Goodman in Rio de Janeiro at jgoodman19(at)bloomberg.net
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