UPDATE 2-Mexico's PRI party wants to cut tax rate

* Mexico opposition party wants to boost tax revs

* Party recently gained upper hand in Congress

* PRI wants to cut income tax rate

* Energy reform not on the table for now
(Adds quote from politician, background, byline)

By Miguel Angel Gutierrez and Jason Lange

MEXICO CITY, July 10 (Reuters) - A key Mexican opposition
party wants to cut income tax rates but make tax collection
more efficient to boost overall government revenues, its leader
in the Senate told Reuters.

Sen. Manlio Beltrones, whose Institutional Revolutionary
Party won last weekend's mid-term congressional elections, said
his party wants to remove the minimum business income tax that
was the backbone of a minor fiscal reform approved in 2007.

"In its place, the proposal we have advanced is to simplify
the income tax and consider a gradual reduction in its rate,"
Beltrones said late on Thursday in an e-mail response to
questions from Reuters.

Many experts say the easiest way for Mexico to boost
government revenues and avoid a looming downgrade in its credit
rating would be to tax food, which is currently exempt.

With poverty on the rise because of a deep recession,
Mexico's ruling and opposition political parties say that
option is off the table.

The PRI, as Beltrones' party is known, is the largest party
in Mexico's lower house after last Sunday's election,
leapfrogging President Felipe Calderon's conservative National
Action Party, or PAN. The PRI plans to form a coalition with
the smaller Green Party that will give it an absolute majority
in the lower house.

Beltrones said his party will work to reach deals with
Calderon on economic reforms.

Mexico's tax take is among the lowest levels in Latin
America, equivalent to 10 percent of gross domestic product.

For years Mexico has put off a deep fiscal reform by
leaning heavily on revenues from oil exports. But crude
production is falling quickly as one of its largest oil fields
dries up.

"That is a vulnerability that we cannot evade," Beltrones
said.

The fiscal outlook has led Standard & Poor's and Fitch
rating agencies to warn they could cut Mexico's credit rating.

Weak government revenues have lead to shoddy schools, roads
and other infrastructure, dragging on economic growth.

Overhauling oil laws is another major pending economic
reform, but Beltrones said PRI does not want to consider
overhauling investment rules for the oil industry until state
monopoly Pemex's administration becomes more efficient.
(Editing by Dan Grebler)