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Calderon’s Party May Try to Cut Mexico Sales Tax, Lawmaker Says
 Adriana Lopez Caraveo & Jens Erik Gould - Bloomberg
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January 28, 2010
Mexican President Felipe Calderon’s party may propose a cut in the value-added tax while broadening the tax base to maintain revenue, the party’s vice coordinator in the lower house of Congress said.
Lawmakers from the National Action Party will meet today with Finance Minister Ernesto Cordero to discuss the proposal, which may include eliminating tax loopholes for companies, lawmaker Roberto Gil told reporters in Puebla, Mexico.
“We’re going to look at the sales tax issue,” Gil said at an assembly of the party, which is known as the PAN and is the second-largest in the lower house of Congress. “Raising the tax base and lowering the tax rates can improve the structure of the value-added tax in a significant way.”
Mexico’s government raised the value-added tax by 1 percentage point to 16 percent this year as it aims to boost public revenue in order to make up for declining oil production and a fall in income taxes amid last year’s recession. Output at state-owned Petroleos Mexicanos, Latin America’s largest oil producer, fell 7 percent in 2009 from the year-ago period.
Mexico’s Institutional Revolutionary Party, the largest faction in the lower house, said last week it was considering a proposal to lower the sales tax to 12 percent while taxing all foods and medicines that aren’t essential to the poor. Food and medicine are currently tax exempt.
Calderon proposed last year creating a 2 percent levy that would include food and medicine in order to increase the tax base. Lawmakers opposed that plan.
To contact the reporter on this story: Adriana Lopez Caraveo in Puebla, Mexico, at adrianalopez(at)bloomberg.net; Jens Erik Gould in Mexico City at jgould9(at)bloomberg.net
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