Mexico opposition to shun gov't tax plan - deputy

MEXICO CITY, Sept 11 (Reuters) - Mexico's main opposition Institutional Revolutionary Party, or PRI, is unlikely to agree to a government proposal to add a 2 percent sales tax to all consumer products, a senior party deputy said on Friday.

"For us there is apparently no possibility of this," Oscar Levin, who will be on the lower house finance and budget committees for the budget talks, told Reuters during a meeting between his party and finance ministry officials.

Levin also said the PRI would seek a bigger federal budget deficit for 2010 than the 0.5 percent of gross domestic product proposed by President Felipe Calderon in his budget proposal this week. He said the PRI favored taking on more debt to fund spending on infrastructure that could boost the economy.

"We could envisage something bigger," he said, suggesting between 1 and 1.5 percent of GDP as a better level for the deficit.

Levin said Calderon's budget proposal as a whole would require "major surgery" in Congress, and said the PRI will push for deeper spending cuts and a higher forecast Mexican oil price for 2010 than the $53.9 per barrel proposed.

In a preliminary assessment of the tax proposal on Thursday, PRI lawmakers described as "worrisome" Calderon's idea of adding a new tax to all consumer products and said raising taxes would hurt the economy. Currently food and medicines are exempt from taxes and opposition lawmakers say including such items would hurt the poor.

Calderon's tax proposal aims to cope with a sharp drop in oil exports and the deepest economic downturn since the 1930s, but many opposition legislators are opposed to raising taxes during a recession.

The ruling conservatives cannot get the tax plan through Congress without votes from the PRI, which became the biggest party in the lower house after winning a mid-term election.

Mexico is trying to avoid a debt downgrade threatened by rating agencies worried about its low tax collection and overdependence on oil.

Calderon is promising to spend new tax revenues on welfare programs for the poor, but the PRI says tax rises will stoke inflation and hurt poor families' purchasing power. (Reporting by Michael O'Boyle; Editing by James Dalgleish)