Mexico's Pena Nieto Vows Not to Buckle on Taxes The Financial Times
go to original September 3, 2015

Members of the government listen to Mexico's President Enrique Pena Nieto give his third State of the Nation address, seen on a large screen inside the National Palace in Mexico City, Wednesday, Sept. 2, 2015. (AP/Rebecca Blackwell)

Read my lips: No new taxes. Mexico's President Enrique Peña Nieto promised in his annual state of the nation speech that despite the fall in oil revenues, he would not boost taxes.

It's a promise he has made before – but with the oil price fall biting, the president vowed to honor his word. "I will not propose new taxes or tax increases," he said, spelling out that this meant no VAT on food and medicines, something that had been under discussion before the government's tax reform in 2013, writes Jude Webber in Mexico City.

That reform, he said, had boosted Mexico's tax take – which is low compared to its peers – to 13.6 per cent of GDP in the first half, 5.2 points more than last year. Meanwhile, oil revenue fell to 18 per cent of state income in the first half, versus nearly 40 per cent in 2012, he said.

Despite a tough external environment, he also ruled out hiking Mexico's debt burden. "It's up to the government to tighten its belt, to spend less and to spend better," he said.

The government has to present its 2016 budget to Congress by September 8, and has been working out this year's finance package not by simply looking at how much was assigned to each ministry or program and updating it, but by taking a "zero-based budget" approach and starting its calculations from scratch, evaluating how much to allocate and where.

Read the rest at The Financial Times

Related: Mexico to Rely on Financial Tools to Boost Investment (WSJ.com)

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