MEXICO CITY (Reuters) - Mexico’s leftist government said on Tuesday it would lower taxes on owners of businesses that issue shares, lifting the local stock market, which was battered last year by worries about policymaking under the new administration.
Finance Minister Carlos Urzua said at a government-sponsored event in Mexico City that the tax rate on returns from initial public offerings would drop to 10 percent from 30 percent.
“The idea is to try to promote initial public offerings” Urzua said.
He noted that Mexico had a low number of publicly listed companies compared with other major economies in Latin America.
Mexico's benchmark S&P/BMV IPC stock index .MXX extended gains after the announcement to rise 1.5 percent to a nearly two-month high.
“The market liked it,” said Gerardo Sienra, head of equity sales at Mexican brokerage Intercam.
Last year, Mexican stocks were hammered after Lopez Obrador canceled a partly built $13 billion airport and lawmakers from his leftist majority introduced unexpected bills, such as a plan to limit bank fees.
“In these first days of the year, the feeling is more confident,” Sienra said. But he added that “there is a lot of caution, because we have seen that on any given day, the rules could change.”
The IPO tax cut was among several new measures directed at the financial sector, including a platform for mobile-phone banking that Urzua said would help draw more un-banked Mexicans into the financial sector.
Only 60 percent of adult Mexicans have a bank account and most transactions are done in cash, he said.
Urzua also said pension funds would get more flexibility on investment decisions, but he did not provide specific details.
The finance minister spoke at the event along with other top officials, including Central Bank Governor Alejandro Diaz de Leon.
Last week, the central bank filed a lawsuit with the Supreme Court, challenging a new law mandating salary cuts for its and other government officials on the grounds that the statute interfered with the bank’s constitutionally guaranteed independence.
Lopez Obrador has said he would respect the central bank’s autonomy, and Urzua said the Bank of Mexico was “a very good bank in terms of monetary policy” at Tuesday’s event.
Reporting by Stefanie Eschenbacher and Michael O'Boyle, additional reporting by Miguel Gutierrez