Mexicos government will present a bill today to boost tax collection without applying a sales levy on food or medicine, according to two people with direct knowledge of the proposal who asked not to be identified before the plan is announced.

The measure will also seek a levy on sugary drinks and on capital gains from stock-market transactions, and raise the personal income tax ceiling to 32 percent, while leaving it at 30 percent for companies, one of the people said.

President Enrique Pena Nieto has pledged to boost tax collection as part of his plan to boost economic growth that has remained below the regional average over the past decade. Thousands of people took to Mexico Citys streets today to march against the governments plans for everything from education to the oil industry ahead of the tax bills presentation. The countrys second-largest opposition party said it opposes a tax on food and medicine because it would hurt low-income earners.

Food and medicines are things that affect everybody, Eric Farnsworth, head of the Washington office of the Council of the Americas, said in a telephone interview yesterday. The last thing the PRI wants to do is give one of their primary opposition parties a silver platter way to attack tax reform.

Pena Nietos Institutional Revolutionary Party, known as the PRI, sparked speculation that a value-added tax on food and medicine would be imposed after it ended a ban in March that prohibited its members from voting to approve such levies.

The president will propose the tax overhaul today at the presidential manor after his administration delivers the 2014 budget plan to congress. His office and the Finance Ministry press department declined to comment about details of the tax reform.

Pena Nietos economic proposals will bring social instability to the nation, Alejandro Sanchez Camacho, secretary general of the opposition Democratic Revolution Party, said yesterday in a statement.

Andres Manuel Lopez Obrador, runner up in last years presidential election, is leading a street protest today against food and medicine taxes and Pena Nietos bill to open the energy sector to more private investment. Marchers gathered blocks from the Zocalo, the capitals main square, which for weeks has been occupied by a tent city of demonstrators against Pena Nietos separate education overhaul.

Cesar Camacho, the PRIs president, said in a Sept. 4 interview hes against charging duties for medicine.

Pena Nietos tax changes are seeking to wean Latin Americas second-largest economy off its dependence on oil revenue. Income from oil funds about a third of the federal budget, and tax revenue in Mexico is the lowest as a percentage of gross domestic product among 34 members of the Organization for Economic Cooperation and Development.

Originally posted here:

Mexico’s Pena Nieto Tax Bill Said to Exclude Food, Medicine VAT