Key Mexico opposition party sees tax reform passing

MEXICO CITY, Aug 20 (Reuters) - Mexican President Felipe Calderon will probably win congressional approval for his landmark tax reform proposal before a September deadline, a key opposition party leader said on Monday.

"I would say that a fiscal reform will be passed," said Emilio Gamboa, leader of the opposition Party of Institutional Revolution Party, or PRI, in the lower house.

Gamboa has been an important negotiator in talks between the PRI and the government over Calderon's proposal. The president's conservative party lacks a majority in Congress, and needs the PRI's votes to pass legislation.

Calderon wants to boost Mexico's paltry tax collection to improve the country's subpar roads and schools and make the economy more competitive.

Investors are watching the process closely because a congressional victory for Calderon could pave the way for further economic reforms.

The PRI has signaled that it is willing to play ball with Calderon, though time is running out. Congress has to pass the legislation by Sept. 8 so that next year's budget can incorporate higher tax revenues.

Gamboa told reporters that Congress would probably not vote on the bill until after Calderon hands Congress a state of the union report on Sept. 1.

"We are waiting until after the first of September and then we put ourselves to work right away," Gamboa said.

Calderon's proposal would increase Mexico's tax take to about 13 percent of gross domestic product from current levels of around 10 percent, one of the lowest in Latin America.

Gamboa said his party planned to make changes to Calderon's proposed minimum income tax for companies, which is the cornerstone of his proposal.