Mar 9, 2011

Mexican Politics: Mexico’s PRI Proposes Tax Bill to Boost Revenue By as Much as 1.5% of GDP

Mexico’s PRI Proposes Tax Bill to Boost Revenue By as Much as 1.5% of GDP - Bloomberg: "Mexico’s largest opposition party plans to propose a bill tomorrow that would increase government income by as much as 1.5 percent of gross domestic product, Senator Francisco Labastida said.

The Institutional Revolutionary Party, or PRI, aims to expand the tax base by placing levies on products that are currently exempt, such as some food and medicine items, Labastida said in an interview at Bloomberg’s Mexico City office. The measures would increase public revenue by at least 140 billion pesos ($11.7 billion), he said.

“The proposal has objectives that aim to boost investment, economic growth, job creation and to expand the tax base,” said Labastida, who is a former interior minister, governor of Sinaloa state and a presidential candidate in 2000. ...

Mexican government spending is constricted by a tax collection rate that is the lowest among the 34 member countries of the Organization for Economic Cooperation and Development. The country’s tax collection was 17.5 percent of gross domestic product in 2009, while the nation with the highest tax burden, Denmark, collected 48 percent of GDP, according to the OECD.

While Mexico’s economy is the second largest in Latin America, its tax revenue as a percentage of GDP is only the twelfth-highest in the region, below Honduras, Nicaragua and El Salvador, according to a copy of the PRI proposal obtained by Bloomberg.

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