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Mexico to Push Up Fuel Prices; Budget Fight Looms
 Luis Rojas & Miguel Angel Gutierrez - Reuters
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September 13, 2010
Mexico City - Mexico will continueraising domestic fuel prices to eliminate costly subsidies, Finance Minister Ernesto Cordero said late last week as he pushed an austerity plan that opposition lawmakers promise to fight.
Mexico has been lifting fuel prices since mid-2009 to cut losses on fuel sales by state oil monopoly Pemex asthe country recovers from a deep economic downturn.
Mexican drivers enjoy subsidies that in July had them paying roughly 10 percent less to fuel their cars than U.S.consumers do. Heating and cooking fuel also get price support.
"The economic crisis is over and we are in the process of reducing the gasoline subsidies," Cordero told a newsconference the day after presenting the government's 2011 budget proposal.
Mexico has so far this year effectively subsidized domestic fuel by $2.7 billion and is due to offer $1.3 billion in subsidies next year.
Prices in 2011 will remain below international levels, the finance ministry has said.
Fuel subsidies are just one of several contentious issues that lawmakers must resolve as they debate changes to the budget plan outlined by President Felipe Calderon.
Opposition lawmakers want to turn back tax increases set in the 2010 budget and the next few weeks are likely to be full of lively debate as party leaders stake out their position on the budget while positioning themselves ahead of 2012 national elections.
Specifically, opposition lawmakers want to repeal Calderon's hard-won tax hike included in the 2010 budget, which lifted the consumption tax to 16 percent from 15 percent.
Calderon's conservative National Action Party has warned that Mexico, which has a tax take on par with Sierra Leone and relies on dwindling oil exports for about a third of government revenues, must broaden its tax base.
(Writing by Patrick Rucker; Editing by James Dalgleish)
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