Mexico Congress to hold special sessions, buttressing reforms

Reuters, 6/12/2013

Congressional leaders of Mexico’s main parties said on Wednesday they had agreed to hold two special sessions of Congress in July and August to tackle outstanding initiatives, paving the way for key energy and fiscal reforms to move forward in the autumn. President Enrique Pena Nieto plans to send measures aimed at boosting Mexico’s paltry tax take and overhauling ailing state-oil monopoly Pemex to Congress during the second regular session of Congress, which begins in September.

But an overhang of outstanding initiatives from the first congressional session, which ended in April, threatened to push back the much anticipated reforms. The two extraordinary sessions agreed to on Wednesday would be held in the second halves of July and August respectively, said Emilio Gamboa, who heads the ruling Institutional Revolutionary Party (PRI) in the Senate.

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Mexico aims to overhaul tax system, raise revenue

Reuters, 5/6/2013

Tax breaks for attending “civic values” courses, tax-free sales of second-hand furniture, special treatment for call centers and an informal economy employing six out of 10 workers are all in the line of fire as Mexico prepares a long-awaited tax overhaul. An analysis of budget data shows Mexico’s extensive network of tax breaks and stimulus programs generate costs equal to about half the taxes actually collected.

Mexico has the lowest tax revenue in the 34-nation Organisation for Economic Co-operation and Development, crimping its ability to spend on health, infrastructure and social programs vital to boost living standards and growth in what is Latin America’s second-largest economy. Finance Minister Luis Videgaray has given few details of the overhaul, due to be presented in the autumn session of Congress, but has promised it will be “large,” reviewing both direct and indirect taxes and making those who earn more, pay more.

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No talks on key Mexico reforms until spat resolved: opposition

Reuters, 4/30/13

A multi-party alliance to modernize Mexico’s economy will not discuss pending energy and tax reforms until an electoral spat between the opposition and the government is resolved, the head of the main leftist party said on Tuesday. Jesus Zambrano, chairman of the opposition Party of the Democratic Revolution (PRD), said there could be no talks on these reforms until the government had taken clear steps to punish those responsible for a vote-buying scandal in the Gulf state of Veracruz that was exposed this month.

“There won’t be (talks) about anything that is not to do with the political and legal … structure that will enable us to get out of this impasse,” he told Reuters in an interview. President Enrique Pena Nieto’s ruling Institutional Revolutionary Party, or PRI, has been forced on the defensive since the conservative National Action Party (PAN) put out recordings of PRI officials advocating the use of government funds to secure votes in Veracruz in elections due on July 7.

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Weekly News Summary: March 8th

The Mexico Institute’s “Weekly News Summary,” released every Friday afternoon summarizes the week’s most prominent Mexico headlines published in the English-language press, as well as the most engaging opinion pieces by Mexican columnists.

What the English-language press had to say…

At its national assembly last Saturday, PRI members voted to end the party’s opposition to constitutional changes that would allow increased private participation in the oil sector, and reversed their previous position on the application of value added tax (IVA) to food and medicine. Leaders of the three main political parties continued to work on a “game-changing” telecommunications reform that is expected to shake up a highly monopolized sector of the Mexican economy. The Miami Herald’s Andres Oppenheimer addressed the recent optimism surrounding the Mexican economy, pointing out that many Mexicans remain skeptical. TIME’s Tim Padgett echoed the sentiment, drawing a parallel between current headlines labeling Mexico “the New China” or “the Aztec Tiger” and similar hype preceding Mexico’s 1994 peso crisis.

Following the excitement of last week’s arrest of Elba Esther Gordillo, journalists began focusing more closely on Peña Nieto’s education reform and the much-needed changes to the country’s lagging public education system. Carlos Slim topped the Forbes billionaire rankings for a fourth consecutive year, while drug kingpin Joaquin “El Chapo” Guzman was left out. The Christian Science Monitor reported Slim’s large share over the telecommunications sector has kept broadband connection costs high, and internet connectivity rates low, compared to the rest of Latin America. Also this week, Mexico’s Supreme Court ruled two common anti-gay words constitute hate speech and are not protected under freedom of expression.

IVA and Oil Reform – The Expert Take

By Duncan Wood, 3/4/2013

Last Saturday’s vote by the PRI party to change its statutes to allow for the application of the value added tax (IVA) to food and medicine, and to allow for increased private participation in the oil sector, significantly improves the prospects for the reform process under Enrique Peña Nieto. This marks an important victory for the reformers within the party, and is a sign that the government now faces minimal internal party divisions that could hold back the reform process. Although much bargaining and negotiation remains with the other parties, the fact that Peña Nieto can now move ahead to talk meaningfully with the other parties in Congress with a united party behind him strengthens his bargaining position.

Will Mexico Welcome Wildcatters?

Videgaray

The Wall Street Journal, 2/24/2013

During the 2012 Republican presidential primary, Mitt Romney recommended “self-deportation” for undocumented workers. President Obama seems to be aiming for the same outcome by perpetuating economic malaise. Migrants who can’t find work are likely to go home on their own.

Can newly inaugurated Mexican President Enrique Peña Nieto, of the PRI (Institutional Revolutionary Party), do any better by the Mexican people? Last week I sat down with MIT-educated Finance Minister Luis Videgaray, who is widely viewed as the economic brains of the Peña Nieto operation, to try to find out.

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Mexico’s PRI to Push Bylaw Changes for Oil and Tax Bills

Bloomberg, 2/22/2013

Leaders of Mexico’s ruling party will propose changing its bylaws to allow taxes on food and medicine and increased private investment in the state-owned oil industry, according to one of the authors of the changes. The new language will be presented at the Institutional Revolutionary Party’s national assembly March 1-3 in Mexico City, said Javier Trevino, a congressman on the assembly’s organizing committee.

President Enrique Pena Nieto has pledged to lift growth by boosting tax collection and breaking Petroleos Mexicanos’s oil monopoly after eight years of production declines. Changing his party’s bylaws would give Pena Nieto the option of presenting bills to expand the items covered by the nation’s value-added tax and amend Mexico’s Constitution to let companies sign joint ventures with Pemex, Trevino said. The President hasn’t yet announced specifics for his planned legislation.

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The Budget Tax Expenditures 2012: “The good, the bad and the following”

Fundación Ethos , July 2012

  In Mexico, the Tax Expenditure Budget (PGF) is unknown by many and, consequently, analyzed by few. Since 2008 Ethos Foundation was given the task of studying this document in depth, specifically with regards to its effectiveness as a tool for helping to make government decisions. This work has been driven by several reasons, including to highlight the urgent need to make optimal use of all resources through which government operates.

To read the document click on the link below:

El Presupuesto de Gastos Fiscales 2012 lo bueno lo malo y lo que sigue

Mexico Senate Completes Approval of Tax Plan

Bloomberg, 10/31/09

MEXICO CITY, Oct 31 (Reuters) – Mexico’s Senate approved on Saturday a watered-down version of President Felipe Calderon’s fiscal reform package to raise taxes to reduce Mexico’s dependence on its waning oil industry.

Senators in the early morning hours on Saturday agreed to minor modifications to a bill passed by the lower house last week and now the Congress will have to vet the changes before the bill goes to Calderon’s desk for final approval.

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Mexico Raises Taxes as Oil Income Falls

Financial Times, 10/22/09

Mexico’s legislators passed a 2010 budget on Wednesday that increases value-added tax for the first time in more than a decade as the government strives to reduce its dependence on oil revenues.

Following an all-night session, the lower house voted to raise VAT from 15 to 16 per cent. It also put up income tax for top earners from 28 to 30 per cent.

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