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A positive part of the tax reform proposal by Senators of the PRI is raised to lower the rate of VAT to 12 percent, because lower rates, fewer distortions in the economy, said the senior economist for Mexico World Bank (WB), Joust Dadaism.

However, he said, the tricky part would be to broaden the tax base, possibly to include food and medicine, which are now exempt or zero rate, “and that might have some regressive impact on income distribution in Mexico” .

In his view, any tax proposal that in Mexico this approach should be to increase revenue, as our country “does not collect a large percentage of its GDP through taxes.”

Moreover, in recent years the level of oil production in the country, which represents an important part of public-sector income has fallen more than 25 percent and the risk of diminishing a bit more, so that have to start replacing oil revenues by tax revenue.

Referring to the proposal of Senators of the Parted Revolutionaries Institutional (PRI), said a positive part is that it needs to reduce the rate of Value Added Tax (VAT) to 12 percent.

“Within the proposal was referred to a supporting part to lower rates is that fewer distortions in the economy, obviously also offset by expanding the base, and we think this is a positive part of the proposal,” he said.

As part of a press conference of the World Bank Country Director for Mexico and Colombia, Gloria Gadolinium, Dadaism said the hardest part of this proposal is to do that effectively raise more or not.