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FACTBOX-Mexico tax reform debate

Oct 1 (Reuters) - Mexican lawmakers are debating President Felipe Calderon’s proposal to raise taxes and lower the government’s dependence on Mexico’s declining oil industry.

Calderon is trying to head off a threatened downgrade of Mexico’s debt rating, but the conservative leader needs support from the opposition to pass his proposal.

The cornerstone of the plan is a new 2 percent sales tax on all products, including currently exempt food and medicine. Calderon also wants to raise income taxes.

Congress has an official deadline of Oct. 31 to pass new tax measures for next year.

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

* The heads of key legislative committees that will write Mexico’s budget were filled this week as lawmakers prepare to debate the fiscal plan in earnest.

* Leaders of the opposition Institutional Revolutionary Party, PRI, have said they will present alternatives to the government’s plans and are prepared to negotiate with President Calderon’s conservative National Action Party.

* A new levy on mining output could be used to help close the budget gap under one plan floated by the PRI. For details see [ID:nN30209338].

* The PRI is considering support for the 2 percent sales tax, if food and medicine remain excluded, said Francisco Rojas, the party leader of lower house lawmakers, local media reported this week.

* Calderon has no backup plan if Congress rejects his proposed tax increases, Finance Minister Agustin Carstens said last week. [ID:nSUM000110] (Compiled by Mexico City newsroom; Editing by James Dalgleish)

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