FACTBOX-Mexico Senate debates tax reform bill

Oct 27 (Reuters) - Mexico's Senate is debating a
watered-down version of a government tax reform proposal passed
by the lower house of deputies last week that aims to reduce a
dependence on waning oil revenues in the 2010 budget.

The opposition Institutional Revolutionary Party, or PRI,
which has the most seats in the lower house, rejected President
Felipe Calderon's plan to boost fiscal revenues with a new 2
percent sales tax covering currently exempt food and medicine.
Lower house lawmakers, however, backed other tax increases.

The fiscal package is now being debated in the Senate,
where the PRI is split on whether to reject the revenue plan.
By law, a fiscal package must be ratified by the end of the
month.

The following are the latest developments compiled from
Reuters stories and Mexican media reports:

* A sizable faction of PRI senators is strongly opposed to
new consumption taxes and may instead push for higher tariffs
on corporations, a party spokesman said. For more see
[ID:nN27255260].

* Mexican business leaders and lobbyists met with senators
to ask lawmakers not to raise their taxes. The business lobby
is particularly upset over a measure passed by the lower house
to change rules on how consolidated companies pay taxes.

* PRI Senators met behind closed doors to decide whether to
support a measure to raise Mexico's value-added tax, or VAT,
one percentage point to 16 percent. [ID:nN26199261]

* The bill passed by the lower house would raise the income
tax rate on the highest earners to 30 percent from 28 percent.
A new 3 percent tax would be levied on some telecom services
while a sales tax on beer would be hiked to 26.5 percent.

* The government's forecast crude oil price would be raised
and the federal deficit cap would be lifted in two moves that
would save officials from making painful budget cuts.

* Andres Manuel Lopez Obrador, the socialist former
presidential candidate who contested his defeat in the 2006
election, headed a street protest against the tax hikes on
Monday but did not call for any major future action.
(Compiled by Jason Lange and Patrick Rucker in Mexico City;
Editing by James Dalgleish)