Mexican legislature passes tax measures sought by Calderon's conservative party and electoral reforms wanted by leftist rivals.
By Héctor Tobar, Los Angeles Times Staff Writer
September 15, 2007
MEXICO CITY — Mexico's legislature approved major overhauls of the nation's tax and election laws Friday, untangling a months-long stalemate that had
threatened to make the country ungovernable in the wake of last year's bitterly contested presidential election.
Longtime rivals crafted the compromise in weeks of highly sensitive talks that gave President Felipe Calderon's conservative National Action Party, or
PAN, the tax reform it had sought for more than a decade. The leftist Democratic Revolution Party, or PRD, which accuses Calderon's party of stealing
the 2006 presidential election, gained tough new limits on negative campaign advertising and a purge of top election officials.
Friday's votes showed that Calderon is a more savvy political operative than his predecessor, Vicente Fox, who struggled to advance his agenda during
his six-year term. A PAN veteran experienced in rough-and-tumble politics, Calderon was willing to compromise with PRD leaders even as they attacked
him in public as an "illegitimate" leader.
At the same time, PRD moderates gradually and quietly distanced themselves from defeated presidential candidate Andres Manuel Lopez Obrador, who
proclaimed himself Mexico's "legitimate" president after last year's vote.
"With the approval of these reforms, Mexico will be stronger in its public finances and stronger in its institutional life," said Calderon, who
declared that he'd sign both sets of legislation.
The tax reform eliminates loopholes in corporate taxes, creates a new tax on cash deposits, and increases the gasoline tax by 5.5%. Analysts said it
may allow Mexico to survive a looming fiscal crisis caused by declining production from the country's government-run oil fields, a crucial source of
public funds.
The new tax measures are expected to increase government revenue by about 5%, adding about $10 billion annually to the public coffers. Tax collectors
will get more funding to crack down on widespread tax evasion, which the newspaper El Universal in an editorial Friday called "the second national
sport" after soccer.
The electoral reform seeks to rein in political campaign spending by giving all candidates free access to the airwaves. Supporters of the reform said
it would level the electoral playing field. Calderon is widely believed to have won the July 2006 election with a sophisticated and well- financed
media campaign that gradually eroded the leftist candidate's large lead in the polls.
The electoral measures consist of legislation and eight constitutional amendments that gained the backing of all three of the country's leading
political parties: the PAN, the PRD and the Institutional Revolutionary Party, or PRI, which have almost equal representation in the Mexican Congress.
The amendments are expected to be ratified quickly by Mexico's states.
The president praised "the responsibility and high-mindedness" of the Senate and the Chamber of Deputies, the upper and lower houses of Congress.
Investment pledge "I repeat the promise of this government to invest these additional resources in the infrastructure, education and health programs
that the neediest Mexicans require," Calderon said.
Under the electoral reform, all broadcast outlets wil be required to provide 48 minutes each day free to political campaigns. The time will be divided
among legally registered political parties based on their share of the vote in the most recent election. Mexico's television and radio stations will
be prohibited from selling airtime to candidates. The presidential campaign season will be shortened from 186 days to 90 days.
Mexico's media giants Televisa and TV Azteca opposed the move. But Jose Woldenberg, a former head of Mexico's Federal Electoral Institute and a
respected voice on election issues here, said the reform would be a step forward.
"The democratic life of the country is the winner, because there will be better campaigns and less campaign spending," Woldenberg said.
For more than a year, the Chamber of Deputies, in the San Lazaro district of Mexico City, had been a forum of discord. More than once, rival
legislators pummeled and wrestled one another over control of the dais.
But this week, Mexico's political journalists took delight in describing the art of the political deal, something rarely seen in a country where
multiparty democracy has taken hold only in the past decade as the PRI lost its grip on power.
The Senate had approved the electoral reform Wednesday and the Chamber of Deputies had approved the tax reform Thursday.
"It was a day of great expectation . . . but as the session opened, it was clear that everything would go forward without incident," El Universal
wrote, describing the vote to approve the tax reform in the Chamber of Deputies. "As they say in the argot of San Lazaro, everything was 'ironed out.'
"
On Friday, the Senate took up the tax reform and the Chamber of Deputies took up the election reform bill.
Juan Guerra, a PRD congressman, said the election reforms would liberate politicians from the "feudal lords" of Mexico's media conglomerates.
"Today we are completing a rebellion of the serfs," he said. "Today, Mexicans who don't have money to pay for media campaigns will be able to run as
candidates."
The reform will also gradually replace all the commissioners of the Federal Electoral Institute, which supervises all elections. The PRD had accused
the institute of favoring conservative candidates by failing to act when Calderon launched "slanderous" attack ads against PRD candidate Lopez
Obrador.
Tacit recognitionThe reforms approved Friday were a tacit recognition by the legislature that some of the PRD's criticisms of the 2006 election were
justified. Such a concession was the political price Calderon had to pay to get his tax reform.
"We won't let the tax reform be debated if the electoral reform isn't," Javier Gonzalez Garza, another PRD congressman, said this month. "The two
reforms go together. If there is no electoral reform, you can forget about the tax reform."
The tax reform includes a new tax on cash deposits, a measure seen as targeting Mexico's vast informal economy. Cash deposits to banks exceeding
$2,300 per month will be taxed 2%.
New restrictions were also placed on corporate tax deductions, a measure aimed at reducing tax evasion at the other end of the income spectrum as
well.
hector.tobar@latimes.comDENNIS - 9-15-2007 at 05:05 PM
Quote:
Originally posted by Hook
Cash deposits to banks exceeding $2,300 per month will be taxed 2%.
2% per month? That can't be right.Diver - 9-15-2007 at 05:16 PM
2% per year = $46 on $2,300 ?
Must be meant for you rich guys with a couple hundred large in the bank !
I heard there would be a big change to capital gains; anyone hear anything ?
.DENNIS - 9-15-2007 at 05:27 PM
Diver ......
Per annum occured to me but the writer wasn't clear. I don't know what the current interest rates are for savings accounts. At any rate, as hard as
it is for some to earn and save, they won't be using banks if it's going to cost them.Hook - 9-15-2007 at 07:43 PM
Yeah, Dennis, that's the part I was thinking about.comitan - 9-15-2007 at 07:48 PM
It surely will affect us with a 5.5% increase in gas tax.DENNIS - 9-15-2007 at 07:56 PM
Doesn't gas go up about 1 or 2 % each month anyway? And propane?bajalou - 9-15-2007 at 08:04 PM
Quote:
Originally posted by DENNIS
Doesn't gas go up about 1 or 2 % each month anyway? And propane?
Usually about 2-3 centavos per liter on gasoline and diesel.DENNIS - 9-15-2007 at 08:10 PM
Lou....
I don't know but, it seems to go up a bit more than that. Given your rate, it would take around two and a half years to go up one peso per liter.bajalou - 9-15-2007 at 08:17 PM
I had thought it went up more also, but when this was brought up a while back, MrBillM posted monthly records in about this range. Maybe he will post
the latest increases.
Just looked at Baja Cactus's posts on prices for Apr thru Jul
Magna
Apr 6.55
May 6.58
Jun 6.60
Jul 6.64
[Edited on 9-16-2007 by bajalou]Riom - 9-16-2007 at 04:34 AM
Quote:
Originally posted by DENNIS
Quote:
Originally posted by Hook
Cash deposits to banks exceeding $2,300 per month will be taxed 2%.
2% per month? That can't be right.
It means deposits into the bank, rather than the account balance. In other words, if you add $3000 into your account, only $2940 ends up in it, $60
goes to the government, one time only.
BTW, that's dollars, the actual figure is 25,000 pesos a month, so won't affect regular deposits of pensions etc. unless they're larger than that.
[Edited on 9-16-2007 by Riom]msteve1014 - 9-16-2007 at 05:38 AM
it also said "cash" deposits. i took that to be their way of taxing money that was made "under the table", as we call it.Riom - 9-16-2007 at 05:50 AM
Quote:
Originally posted by msteve1014
it also said "cash" deposits.
True, so shouldn't affect transfers from other banks (otherwise, it'd also be a $10,000 dollar fee on the money transferred in to buy a $500k
property).
I was thinking it was like the taxes they had (still have?) in Australia where all deposits/transfers into a bank account are taxed by the federal
government (at a much lower rate), and where withdrawals are then taxed by the state government.DENNIS - 9-16-2007 at 08:26 AM
Quote:
Originally posted by bajalou
Just looked at Baja Cactus's posts on prices for Apr thru Jul
Magna
Apr 6.55
May 6.58
Jun 6.60
Jul 6.64
Wow. That's like nothing. I don't pay attention. I need it, I buy it.CaboRon - 9-18-2007 at 11:50 AM
Quote:
Originally posted by msteve1014
it also said "cash" deposits. i took that to be their way of taxing money that was made "under the table", as we call it.
Quite right, and further a way to at least get a cut of cartel money.... should put a minor crimp in their money laundering....
CAboRonBajaBruno - 9-18-2007 at 04:06 PM
Quote:
Originally posted by DENNIS
Quote:
Originally posted by Hook
Cash deposits to banks exceeding $2,300 per month will be taxed 2%.
2% per month? That can't be right.
Here is how I interpreted that sentence:
For each calendar month, the first $2,300 of otherwise untaxed deposits are free.
Any otherwise untaxed cash deposits in excess of $2,300 in any given month are taxed at 2%.
So, each month you get an additional $2,300 free of tax, but anything deposited over that in the month is taxed at 2%.
I don't think I am reading too much into the language, but it's all a matter of interpretation!
[Edited on 9-19-2007 by BajaBruno]DENNIS - 9-18-2007 at 04:11 PM
Quote:
Originally posted by BajaBruno
all a matter of interpretation!
Like most other information about Mexico, it can, and may, be interpreted a million different ways. Specific facts are an ellusive commodity here.
