Mexico's Calderon proposes temporary income tax hike

MEXICO CITY, Sept 8 (Reuters) - Mexican President Felipe Calderon asked Congress to raise some taxes next year while slashing government borrowing and spending, as the government tries to head off a credit rating downgrade.

Finance Minister Agustin Carstens handed a budget proposal to lawmakers on Tuesday that included proposals to temporarily raise the income tax rate and increase taxes on cash deposits in banks and on tobacco, alcohol and gambling.

Calderon proposed a 2010 budget deficit of 60 billion pesos ($4.5 billion), which would be equivalent to around 0.5 percent of Mexico's current gross domestic product. ($1=13.3604 pesos) (Reporting by Noel Randewich and Luis Rojas Mena; editing by Carol Bishopric)