October 23, 2013 / 7:26 PM / 4 years ago

Mexico ruling party ready to back higher junk food tax -lawmaker

By Dave Graham and Miguel Gutierrez
    MEXICO CITY, Oct 23 (Reuters) - Mexico's ruling
Institutional Revolutionary Party (PRI) is ready to support an
opposition proposal to increase a planned tax on junk food, the
party's leader in the Senate said on Wednesday.
    Last week, the lower house of Congress approved a planned
fiscal reform containing a measure to impose a 5 percent tax on
junk food, and the Senate is expected to approve the reform by
the end of the month. 
    Earlier this week Armando Rios Piter, a finance expert from
the leftist Party of the Democratic Revolution (PRD) in the
Senate, proposed increasing the rate on the junk food tax to 8
    Asked whether the PRI could back a higher junk food tax,
which also aims to reduce high levels of obesity in Mexico, the
party's Senate leader Emilio Gamboa told Reuters: "The PRI will
undoubtedly support it."
    He noted that the finance committee of the Senate still had
to approve the fiscal bill, which is a key plank of a wider
reform agenda spanning energy to telecommunications that
President Enrique Pena Nieto hopes will boost growth in Latin
America's No.2 economy.Rios Piter estimates that an 8 percent tax would bring in
5.6 billion pesos ($431.90 million) in revenue, versus around
3.5 billion pesos under a 5 percent rate.
    The PRI lacks a majority in Congress but a measure backed by
at least part of the PRD is likely to pass the Senate. Any
changes to the fiscal reform would mean sending it back to the
lower house to be signed off again.
    Lawmakers also rolled back plans to apply sales tax to
rents, mortgages, property sales and school fees, while raising
the top income tax rate on a sliding scale to 35 percent from 30
    However, a key part of the planned tax overhaul could come
under pressure as it goes through the Senate, after a top
lawmaker on Monday said plans to raise sales tax in border
states should be rejected.
    Miguel Barbosa, Senate leader of the leftist opposition PRD,
called for a vote against the government plan to raise the 11
percent value-added tax rate for border states to match the
national rate of 16 percent. 
    The lower house left that part of the bill unchanged.
    The tax bill is tied to the 2014 budget, which must be
signed off on by mid-November.
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