Mexico won't add sales tax to food in current term: finance minister

MEXICO CITY Mon Sep 9, 2013 5:55pm EDT

Mexico's Finance Minister Luis Videgaray looks on after handing in the fiscal reforms to congressmen at the Congress building in Mexico City September 8, 2013. REUTERS/Tomas Bravo

Mexico's Finance Minister Luis Videgaray looks on after handing in the fiscal reforms to congressmen at the Congress building in Mexico City September 8, 2013.

Credit: Reuters/Tomas Bravo

MEXICO CITY (Reuters) - Mexico's government sees its newly unveiled proposal to overhaul the tax system as sufficient and has no plans to apply sales tax to food and medicine during President Enrique Pena Nieto's term, Finance Minister Luis Videgaray said on Monday.

The government on Sunday proposed raising taxes for higher earners, imposing a levy on stock market gains and boosting social programs to help the poor, but it shied away from widening a controversial sales tax amidst an economic slowdown.

Videgaray told reporters the government had no plans for any additional tax reform later in the term beyond the current proposal, which Congress must now debate.

"I do not anticipate a greater effort, or an intent at a new fiscal reform that would radically change the rules," Videgaray said.

"The goal of this administration is to make any changes to the rules during the first year, and thus provide certainty."

Videgaray said the current economic slowdown "was not a good time" to widely raise consumption taxes, which would further drag on growth and hit the poor the hardest.

The planned fiscal reform includes a universal pension and unemployment insurance in a country where half the population lives in poverty.

"What is missing and is not included is universal healthcare," said Gustavo Madero, leader of the conservative National Action Party (PAN), adding he believed the reform punished the middle class.

Videgaray said the tax proposal, which envisions boosting government revenue by 2.9 percent of gross domestic product by 2018, would be able to fund the plan.

(Reporting by Michael O'Boyle and Luis Rojas; Editing by Eric Walsh)

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