Mexico Tax Proposal Said to Exclude Food, Medicine From VAT

Mexico’s government will present a bill today to boost tax collection without applying a sales levy on food or medicine, according to two people with direct knowledge of the proposal who asked not to be identified before the plan is announced.

The measure will also seek a levy on sugary drinks and on capital gains from stock-market transactions, and raise the personal income tax ceiling to 32 percent, while leaving it at 30 percent for companies, one of the people said.

President Enrique Pena Nieto has pledged to boost tax collection as part of his plan to boost economic growth that has remained below the regional average over the past decade. Thousands of people took to Mexico City’s streets today to march against the government’s plans for everything from education to the oil industry ahead of the tax bill’s presentation. The country’s second-largest opposition party said it opposes a tax on food and medicine because it would hurt low-income earners.

“Food and medicines are things that affect everybody,” Eric Farnsworth, head of the Washington office of the Council of the Americas, said in a telephone interview yesterday. “The last thing the PRI wants to do is give one of their primary opposition parties a silver platter way to attack tax reform.”

Pena Nieto’s Institutional Revolutionary Party, known as the PRI, sparked speculation that a value-added tax on food and medicine would be imposed after it ended a ban in March that prohibited its members from voting to approve such levies.

Street Protest

The president will propose the tax overhaul today at the presidential manor after his administration delivers the 2014 budget plan to congress. His office and the Finance Ministry press department declined to comment about details of the tax reform....

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