Mexico Tax Plan Seen by JPMorgan as Sign to 'Tighten Your Belts' Brendan Case - Bloomberg
go to original September 7, 2013

Mexican President Enrique Pena Nieto may propose applying new levies on food and soft drinks, boosting income tax rates, tightening corporate tax rules and scrapping gasoline subsides, JPMorgan Chase & Co. analysts said.

The 2014 budget and tax proposal will attempt to increase the government’s non-oil revenue while lightening the fiscal burden on state-owned oil monopoly Petroleos Mexicanos, JPMorgan’s Nur Cristiani, Gabriel Lozano and Steven Palacio said in a report today. The plan is set to be unveiled Sept. 8.

Pena Nieto’s plan “will likely involve a heated discussion as many of the matters under review are highly unpopular,” the JPMorgan analysts said. “The government will need to carefully balance tax collection with lower dependency on oil revenues and current economic and consumption deceleration.”

Mexico’s central bank changed the backdrop for Pena Nieto’s announcement with the second cut this year in its benchmark interest rate after inflation decelerated to within its target range and the economy expanded at the slowest pace since the 2009 recession. Lower rates may stimulate growth, easing the sting of possible tax increases.

Read the rest at Businessweek

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