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Mexican Assembly Approves 2011 Budget

by Glen Shapiro, LawAndTax-News.com, New York

17 November 2010


Mexico’s lower house of Congress has approved the 2011 spending budget with an increase of 8.2% compared with the present year.

After three days of wrangling, the lower house voted 454 to 13 in favor of the spending portion of the budget, which called for total expenditure of MXN3.44 trillion (USD280bn) compared to MXN3.35 trillion originally proposed by President Felipe Calderon in September.

The opposition Institutional Revolutionary Party (PRI), which has the most seats in congress, agreed to give up its demand for a 1% cut in value-added tax, but wished instead to boost disaster assistance spending to provinces affected by storms. To this end, a compromise was reached which involved the raising of tax on cigarettes and a 25% tax on “energy drinks” such as Red Bull. Other taxes remain unchanged.

The spending changes from president Calderon's original proposals would be applied mainly in the agriculture and infrastructure sectors, according to Roberto Gil, a member of the lower house budget committee from the National Action Party (PAN). PRI and PAN deputies described the budget as an instrument of economic policy that will encourage investment and employment.

TAGS: tax | value added tax (VAT) | law | budget | Mexico | excise duty

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