Vicente Fox dropped the pretense today, of not working towards the nationalization of Pemex. Tony Abdo _________________________________ MEXICO CITY (Reuters) - Mexico urgently needs fiscal and energy sector reforms to boost development of its economy, the second-largest in Latin America, President Vicente Fox (news - web sites) said on Saturday. Sweeping fiscal reform to reduce heavy dependence on oil revenues is a top priority for Fox, who took office in December. Another is to open the electricity and petrochemical industries to the private sector to finance development needed to meet Mexico's future power needs. ``These are reforms that cannot be delayed ... which would create better conditions for accelerated, sustainable growth,´´ Fox said at a meeting with economic development officials from various states. In coming weeks, Fox plans to send tax reform legislation to the divided Congress that would simplify the tax system and eliminate loopholes. One of the most controversial provisions would extend the 15 percent value-added tax -- an indirect sales tax -- to food and medicine, which are now exempt. Lawmakers from Fox's National Action Party (PAN) have proposed a version of that plan that would gradually lower the value-added tax to 12 percent while extending it to food and medicine, local newspaper Reforma said on Saturday. The PAN bloc's proposal also includes mechanisms to ease the impact on lower-income taxpayers. Low Tax Rate Mexico's tax take is one of the lowest in the region at 11 percent of gross domestic product. Crude-oil exports represent 30 percent of income in the federal budget. Finance Minister Francisco Gil Diaz has said tax reform could increase the tax take to 13 percent of GNP. ``We estimate 120 billion pesos (about $12.4 billion) in tax income in the first year from tax reform,´´ Fox said. ``Of that, 40 billion pesos (about $4.1 billion) goes directly to states and municipalities.´´ Energy sector reform is also likely to face stiff opposition in Congress, where none of the three leading parties holds an absolute majority. Mexicans have shown fierce opposition to anything that smacks of privatization of state-run energy companies. Fox has pledged to draw private investment to the sector without fully privatizing it. ``If we don´t manage to solve this problem of investment in the sector, in six years we will be practically on our knees asking the United States to sell us, please, electricity, diesel, gasoline, natural gas,´´ Fox said. Mexico needs an estimated $50 billion in investment to develop energy infrastructure needed to satisfy demand for the next decade, officials have said. _______________________________________________ CrashList website: http://website.lineone.net/~resource_base
