Mexico's Calderon getting closer to tax reform

By Jason Lange

MEXICO CITY, July 12 (Reuters) - Mexican President Felipe Calderon is closing in on a landmark victory in Congress to rewrite tax laws after courting the opposition party that torpedoed his predecessor's reform agenda.

Calderon's conservative party lacks a majority in Congress, but his proposal to boost tax revenues might get the support it needs from a key political party if he accepts relatively minor changes, a senior lawmaker said on Thursday.

"The way things are moving along now, we see a good chance of (the tax talks) bearing fruit," said lawmaker Jorge Estefan, a point man in fiscal reform negotiations for the opposition Institutional Revolutionary Party, or PRI.

Economists have long warned Mexico is headed for financial disaster if it fails to reduce its dependence on faltering oil production, which funds about a third of Mexico's budget.

Estefan, president of the lower house finance committee, said the PRI wants changes to Calderon's bill but that it would still allow the reform to significantly boost public revenue.

The plan would increase the tax intake by 2.8 percent of gross domestic product by 2012, mostly with a 19-percent minimum income tax for companies known as the CETU.

"We all know the country needs more tax collection and in general terms I do not think the changes that we make will be that major," Estefan told Reuters.

The PRI wants state governors to have more power over spending federal revenues, as well as a tax break for state oil monopoly Pemex.