On today’s legal deadline, the Chamber of Deputies appears set to approve the expenditure law for 2011. The Finance Commission unanimously approved the expenditure proposal at 2am. The President’s request for increases for the security agencies, including the funds to create the unified police forces, were approved. The principal cause of delay in approving the expenditure package had been negotiations to allocate funds for highway construction between the different states. (Excelsior 11/15)
The Chamber of Deputies recessed for the long holiday weekend without electing three new board members for the Federal Electoral Institute (IFE), by the legal deadline of October 30th. According to press reports, the PAN and PRI leadership had agreed to give two of the vacancies to PRI-approved nominees and one to a PAN-approved nominee, freezing out the PRD. The supposed deal was attacked not only by the PRD but also by a number of Deputies in both the PAN and PRI. (Such a deal in 2003 contributed to the IFE’s loss of credibility as an impartial arbiter in the wake of the 2006 presidential election.) The vote is now scheduled for Wednesday, after Congress returns from the Day of the Dead holiday. The three IFE board members to be elected to 9-year terms will be selected from a list of 17 candidates already approved as meeting the legal requirements for the position. (Reforma 10/29)
As expected, the Chamber of Deputies voted to approve the Revenue Law leaving the value added tax rate unchanged at 16%, by a vote of 354-81-4. The PRD, PT and Converagencia voted against, as did a handful of dissident PRIistas. The Chamber voted a Ps. 7 per pack increase in the cigarette tax, and a 25% tax on energy drinks. At the same time, the Chamber increased the estimated growth rate of the economy and price of oil, and the target deficit (to 0.5% of GDP), which will increase the total revenue pie by Ps. 60 billion pesos. The package now goes to the Senate for final approval.(Universal 10/20)
The PRI in Congress continues to press for a reduction in the value added tax rate from 16% to 15%. The PRI delegation in the Chamber is seeking to offset the loss of revenue by raising the estimated growth of the economy in 2011, increasing the forecast price of oil, and also allowing for a larger deficit. Senator Rubén Camarillo of the PAN said the tax reduction was merely an electoral ploy. Meanwhile, the PAN noted that a 12% VAT tax rate was viable if all the current exemptions (except for a limited basket of basic foods and medicines) and special regimes were eliminated. In its weekly bulletin, the Ministry of Finance warned that a cut in taxes in the current environment could put public finances at risk, leading to excessive indebtedness or cuts in vital investment spending. (Reforma 9/27, Excelsior 9/22, Hacienda 9/27)
In a formal appearance before Congress to defend the Government’s 2011 Budget, Finance Minister Ernesto Cordero warned of a repeat of past economic crises if the PRI proposal to cut value added tax rates passed. “To reduce revenues while at the same time increasing the deficit, would create the risk of falling into an unsustainable debt situation that could cause another crisis of internal origin, such as occurred in 1976, 1982 and 1986,” he said. “To weaken the tax base in this moment would be irresponsible, at the time when we are emerging from the need to have to borrow. It is inconsistent when we are ending the need to borrow to lower taxes. Never in the history of the country has a reduction in tax rates increased tax revenues.”(Universal 9/15)
A BGC-Excelsior national poll showed that respondents disapproved of the work that the Senate was doing by a margin of 66%-28%, with the disapproval rate rising through the sexenio. (The Chamber of Deputies shows a similar pattern.) Among the major parties, none are seen as being disposed to work for agreements across party lines. The PRI had been more favorably viewed, but lost its advantage over the past year. “In general terms, more and more persons think that to have a President whose party doesn’t have a majority in Congress damages democracy because it is difficult to reach agreements. … However, by 55% to 39%, they [also] think that it is beneficial if the party in power doesn’t have a majority in Congress because issues are discussed more deeply.” (Excelsior 9/13)
Even as the PRI leadership – Manlio Fabio Beltrones, Beatriz Paredes, and Francisco Rojas – met privately with President Calderón to discuss budget priorities, the party published an open letter to the President calling for an economic package with no new taxes and a rollback of the value added tax (VAT) from 16 to 15%. Undersecretary of Finance José Antonio Meade said the budget, to be delivered on the 8th, would keep all taxes unchanged from current levels and called the proposal to cut tax rates “irresponsible” given the decline in oil production. Meade said the budget to be proposed would have a deficit of about 0.4% of GDP, and that a 1% cut in the VAT would cost about Ps. 35 billion. (Universal 9/7)
President Calderón met with PRI Senate leader Manlio Fabio Beltrones to discuss the legislative agenda. The meeting marks a sharp break from the hostile interchanges between the Government and the PRI in the run-up to the elections–and the day after PRI party president Beatriz Paredes said, “We will negotiate nothing.” According to the Bajo Reserva column:
A bridge has opened. After the big confrontations with the PRI, Felipe Calderón met yesterday with the PRI Senate leader, Manlio Fabio Beltrones. And this was no casual encounter. It was in [the presidential residence] Los Pinos. It’s known that they talked about the obvious: the pending structural reforms, insecurity, impunity, the war against the narcos, the urgent need for dialogue among the political forces. What isn’t known if they talked about the distancing of the President from the priistas, which dates from November 2009 and which flared up again a few days before July 4th. Why Senator Beltrones and not Beatriz Paredes? This question encapsulates, among many other things, just how things are: Is the President now operating as his own Secretary of Government?
The Justice Ministry (PGR) arrested Gregorio “Greg” Sánchez, the PRD-PT-Convergencia candidate for governor of the state of Quintana Roo. Sánchez is the mayor of Cancún, and was charged with violation of drug laws, racketeering, and use of illicit funds. PGR sources said he was linked to the Los Zetas paramilitary gang and the Beltrán Leyva cartel. His administration has been under suspicion at least since the kidnapping and murder of General Mauro Enrique Tello in February 2009. PRD Senate leader Carlos Navarrette angrily denounced the arrest in a press conference as a political provocation. “As president of the Senate, I consider it completely unacceptable to use the PGR for purely electoral and political ends….This situation will have an enormous cost for democracy in Mexico,” he said. (Universal 5/26, Reforma 5/26)
Congress recessed until September 1 without passing any of the pending reform proposals. (Universal 5/1, Reforma 5/1)
Political reform: President Calderón put forward his 10-point reform last December, followed by the PRI’s package in February, and a PRD version. All of these, plus others, languish in the legislative commissions without any consensus.
Labor reform: Labor Secretary Javier Lozano proposed a comprehensive reform in March to make labor contracting rules more flexible and making unions more transparent and democratic. It is strongly supported by the business community. May Day marches by the major labor unions across the country attacked the proposed legislation, and neither house has yet voted. (Universal 5/2)
Fiscal reform: No specific proposals have been made public, despite widespread recognition that urgent change is needed on both the spending and revenue side of the budget.
New media law: The PAN and PRD congressional delegations proposed an integrated reform in mid-April, after the PRI tried to ram through a Televisa-drafted bill. Hearings will continue over the summer. (Universal 4/28)
National Security reform: The Senate approved a law 105-1-1 clarifying the procedures and standards for deploying the military in public safety (i.e., crime fighting) operations, while punting on the question of subjecting members of the military to civilian court jurisdiction for some crimes. The law as passed is believed to be strongly opposed by at least parts of the military. The Chamber did not bring it to a vote. (Universal 4/28, 5/3)
Competition law: A watered down version of the Government’s proposed law to strengthen the Federal Competition Commission and stiffen penalties for monopolistic practices was passed by the Chamber 386-15-2; the Senate has not acted. (Excelsior 4/30)
Human Rights law: A constitutional reform strengthening constitutional protection for human rights and giving the language in the Constitution and giving the National Human Rights Commission (CNDH) the power to investigate “grave violations of individual rights” passed the Senate in early April. The Chamber has not yet acted. (Universal 4/9)