President Enrique Peña Nieto submitted the Fiscal Reform Bill, designed to amend Articles 4 and 123 of the Constitution, to Congress. “It is a social reform that establishes Universal Social Security and increases public investment in strategic sectors such as education and infrastructure,” he declared.
He stressed that this is a reform that establishes a fairer, simpler and more transparent tax system for all Mexicans. “Taken as a whole, it will help reduce the high levels of inequality among Mexicans, those that earn more will also pay more while those with least will also obtain more benefits.”
He declared that the proceeds of the tax reform must serve two main purposes: trigger higher economic growth and uphold the social rights of Mexicans. “With the Tax Reform, we will all do more for the country and Mexico will do more for all Mexicans.”
He explained that it contains two protection schemes that are essential components of the new Universal Social Security System: the Universal Pension, which will benefit all Mexicans aged 65 years or over, with a basic income for their livelihood; and Unemployment Insurance, which will protect workers and their families by providing a temporary income when they face the plight of losing their jobs. This bill, he continued, is designed to make the shift from Social Security as a labor right to social security as a human right.
THERE WILL BE NO TAX ON FOOD AND MEDICINES
President Peña Nieto explained that the Tax Reform is a comprehensive, fair reform, “Because it will not affect Mexicans who have least,” while acknowledging that the economy, “is growing at a slower rate than expected and, consequently, a tax on basic products at this moment would have an adverse effect on consumption and people’s well-being.”
In this regard, he highlighted his decision to ensure that the Tax Reform Proposal does not include VAT on food and medicine, “This is a socially just and economically responsible decision at this point,” he declared.
He said that the amendment proposes that the VAT rate should remain at 16 percent, adding that medical services, urban transport, books and magazines will continue to be exempt from this tax.
TAX REFORM WILL PUT AN END TO UNJUSTIFIED AND UNWARRANTED PRIVILEGES
“The Tax Reform will put an end to unjustified and unwarranted privileges,” he said, proposing to eliminate three quarters of preferential treatments and almost half the special regimes.
“We will only keep those that provide broad social benefits and have proven effective in supporting the growth of the economy,” he declared.
The president also said that the Tax Reform is a fair reform because it is extremely progressive, “In other words, those that earn most will pay most.”
Therefore, among other measures, taxed will be levied on the profits companies pay their owners, and the profits obtained from the Stock Exchange.