Tax overhaul, Immigration Reform in the US and Energy Reform in Mexico – Weekly News Summary: September 13, 2013

coffee-by-flikr-user-samrevel1The 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…

This week the press largely covered the tax overhaul presented by President Enrique Peña Nieto, which he declared will collect billions of dollars to finance new social programs. The revenue would pay for a new universal pension for all Mexicans over the age 65, a new unemployment insurance scheme, and increase spending on schools and infrastructure. The President sought to avoid the wrath of the Mexican left by leaving out a value-added sales tax on food and medicine. But critics on both the left and the right say the proposed Fiscal Reform piles too much of the tax burden on the middle class. The proposal would raise the top income tax rate from 30% to 32% for workers earning about $38,000 per year, and impose new taxes on a number of everyday expenses, including private school tuition, plane trips, gas and soft drinks.

Several articles discussed Immigration Reform. The Washington Post stated that despite the drive to reform the US immigration system, laws continue to be stalled in Congress. This has inspired some national, which is at least partly responsible for a spike in new immigration laws passed in state legislatures around the country. As of July 1st, 43 states and the District of Columbia had passed a total of 377 laws and resolutions related to immigration. Despite this, there’s no consensus outside Washington. Just as the immigration debate at the federal level is divided along ideological lines, states controlled by Republican and Democratic legislatures are taking very different paths. Reuters, however, published an article stating that a group of California Republican lawmakers are breaking with their party’s skepticism over immigration reform. They are asking the US Congress to give immigrants a path to citizenship in order to relieve California’s heavy dependence on migrant labor for agriculture and construction. Similarly, The New York Times posted a piece stating that Tea Party-favorite and Senator Ted Cruz has tried to articulate a middle ground by offering leniency to undocumented immigrants here already through a path to legal status, but not to citizenship. This would give them a green card with no right to naturalization.

Lastly, Mexico’s Energy Reform was once again a popular topic in US news sources. According to an article published by The Washington Times, if the reform passes, Mexico could make North-America the world leader in oil production. Mexico has oil reserves that are estimated to be from 60 to 120 billion barrels in the deep-water Gulf, shale and other land deposits. When combined with Canada’s huge reserves of oil in the Alberta oil sands and the large shale oil resources that the U.S. is exploiting through pioneering technologies, the unlocking of Mexico’s oil wealth has the potential to put North America on the map as a new “Persian Gulf”. As other sources discuss, what is clear is that debate around the reform will be anything but sensible and its passage anything but smooth. Oil is to Mexicans what gun ownership is to their neighbors to the north: a politicized issue that cannot be discussed without appealing to a zealous interpretation of history, and without championing an ideologically-tainted view of the country’s future.

What Mexican columnists had to say…

This week’s columnists penned several Op Eds about the Fiscal Reform proposed by President Enrique Peña Nieto. Ciro Gómez Leyva criticized the reform and the PRD’s involvement, writing that the changes it proposes will impact the middle and working classes and burden millions of Mexicans. Jorge Fernández Menéndez observed that the reform represents a fundamental shift in Mexico’s political landscape: the creation of a PRI-PRD alliance, which could constitute the basis for the rest of the president’s term. Later in the week, he questioned how EPN’s administration intends to use the new taxes, arguing that it is imperative that the government improve the country’s infrastructure and provide adequate basic services in order to incentivize those in the informal sector to begin to pay taxes. Leo Zuckerman wrote that the reform will not lead to sweeping changes, but rather, to very minor alterations, and that it will not solve Mexico’s low tax-collection rate. In contrast, María Amparo Casar wrote that the reform is sensitive to Mexico’s social needs, as those who earn the most will pay the most taxes and those who have the least will receive more benefits. However, she argued, the reform fell short of broadening the tax base, because without implementing the value-added tax to food and medicine, it will be difficult to raise the necessary revenue. Jorge Fernández Menéndez stated in his Friday column that, according to Rosario Robles, the value-added tax wasn’t applied to food and medicine because that would make 14 more million Mexicans officially poor.

Lorenzo Meyer wrote about the existing opportunity, given the Energy Reform proposal, for all Mexican’s to make Mexico’s 21st Century petroleum project not only one that is national, but also inclusive and nationalistic. An editorial published by El Universal urged for the Energy Reform to be viewed as an opportunity to make the use of shared US/Mexico resources in common subsoil more equitable and mutually beneficial.

Finally, José Woldenberg reflected on the fractured nature of Mexican society, stating that Mexicans co-exist in a state of polarization, with very few ways to bridge ever-growing distances amongst people and no collective identity or “us”. He questioned whether the Fiscal Reform was an attempt to end this, and said that, undoubtedly, higher collection rates demand more transparency and accountability from the government.  Sergio Aguayo noted that Mexico’s near future is very uncertain, and that the Mexican state is currently extremely weak. Denisse Dresser said that the president’s state of the Union left many unanswered questions, and that approving reforms in Congress doesn’t necessarily mean Mexico is moving forward.

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