Category Archives: Congress

Chamber of Deputies Ready to Approve Expenditure Law

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)

Congress fails to act on IFE nominees

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)

Chamber of Deputies approves Revenue Law

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)

 

Congress continues sparring over value added tax rate

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)

Cordero warns of disaster if taxes lowered

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)

Poll: Congress seen as ineffective, confrontational

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)

PRI challenges President on budget, calls for tax cuts

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)