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Puerto Vallarta News NetworkNews Around the Republic of Mexico 

Lower House to Advance Tax Bill With Junk Food Duty

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October 18, 2013

A duty on high-fat foods and a higher tax rate for top earners are parts of a tax reform bill approved by Mexico’s lower house finance committee on Wednesday, paving the way for a full lower house vote.

Mexico’s lower house finance committee approved a bill to raise taxes as President Enrique Pena Nieto’s party joined forces with the opposition Democratic Revolution Party to advance the legislation to the full chamber.

The committee voted 30-12, with one abstention, to approve a modified version of Pena Nieto’s proposal, increasing the top income tax rate to 35 percent and stripping out sales taxes on private education tuition, mortgage interest, and home rentals. Lawmakers added a 5 percent tax on high-fat foods, according to a draft of the bill. The bill could get a vote in the full lower house soon.

Lawmakers from the biggest opposition group in Congress, the National Action Party, or PAN, opposed the bill after Pena Nieto’s Institutional Revolutionary Party, or PRI, refused to drop its plan to increase the sales tax in states that border the US, an area which is considered a traditional stronghold for the party.

A higher tax rate for top earners and duties on high-fat foods were proposals pushed by the Democratic Revolution Party, or PRD, the second-largest opposition group.

"The strategy of the Mexican government is very clear: they’re bringing in the PRD and they’re giving certain concessions in order to get their votes," Benito Berber, a strategist at Nomura Holdings Ltd., said in a telephone interview from New York. "This is a victory for the president and the finance minister. They found an ally that allows them to pass a not-so-diluted fiscal reform."

Under the plan approved Wednesday evening, the maximum income tax rate would increase to 35 percent for people making more than $3 million pesos ($235,000,) to 34 percent for those making more than $1 million pesos, 32 percent for more than $750,000 pesos in annual income and 31 percent for more than $500,000 pesos. The current top income tax rate is 30 percent. Pena Nieto had proposed increasing the top tax rate to 32 percent for more than $500,000 pesos in income.

Original Story