Mexico plan to hike border states' sales tax could face test in Senate

MEXICO CITY Mon Oct 21, 2013 9:16pm EDT

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MEXICO CITY (Reuters) - A key part of Mexico's planned tax overhaul could come under pressure as it goes through the Senate, with a top lawmaker on Monday saying plans to raise sales tax in border states should be rejected.

Lawmakers in Mexico's Lower House of Congress on Friday approved a revised fiscal bill, rolling back plans to apply sales tax to rents, mortgages, property sales and school fees, while raising the top income tax rate on a sliding scale to 35 percent from 30 percent.

The Lower House maintained the government's plan to raise the lower 11 percent value-added tax (VAT) rate for border states to match the national rate of 16 percent.

"We have to ... go against the approval of raising the VAT rate from 11 to 16 percent along the border area," said Miguel Barbosa, Senate leader of the leftist opposition Party of the Democratic Revolution (PRD), whose lawmakers helped approve the reform in the Lower House.

The tax bill is widely expected to be passed by the Senate by early November. The bill is tied to the 2014 budget, which must be signed off on by mid-November.

(Reporting by Elinor Comlay; Editing by Simon Gardner)

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