Reuters' Analysis: Mexico Aims to Overhaul Tax System, Raise Revenue Krista Hughes - Reuters
go to original May 6, 2013

MEXICO CITY - Tax breaks for attending "civic values" courses, tax-free sales of second-hand furniture, special treatment for call centers and an informal economy employing six out of 10 workers are all in the line of fire as Mexico prepares a long-awaited tax overhaul.

An analysis of budget data shows Mexico's extensive network of tax breaks and stimulus programs generate costs equal to about half the taxes actually collected.

Mexico has the lowest tax revenue in the 34-nation Organisation for Economic Co-operation and Development, crimping its ability to spend on health, infrastructure and social programs vital to boost living standards and growth in what is Latin America's second-largest economy.

Finance Minister Luis Videgaray has given few details of the overhaul, due to be presented in the autumn session of Congress, but has promised it will be "large," reviewing both direct and indirect taxes and making those who earn more, pay more.

Currently, the world's richest man, Carlos Slim, is in the same tax bracket as a worker earning $2,700 a month, paying 30 percent income tax - low compared to top rates of 39.6 percent in the United States, 45 percent in Germany and 50 percent in Japan.

Read the rest at Reuters

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