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The Mexicans are engaged today in a national debate on the Tax Package and initiatives introduced by President Felipe Calderón after the 3rd. Report rendered to the Nation on September 2nd, from the National Palace.
The Mexican Nation and the Mexicans themselves, as a whole, are not mistaken on July 5th at the polls when we gave our vote to the PRI, vote that only makes sense to "correctly interpret the mandate", now the PRI has a huge responsibility to face all Mexicans.
On September 2007, I was invited to speak at a forum held here in Cancun, referring the Tax Reform, particularly on IETU (Single Rate Business Tax), at this forum was attended by the President of the Institutional Revolutionary Party (PRI), now deputy Beatriz Paredes Rangel, the Governor of my State: Mr. Félix Arturo González Canto, the then Chairman of the Finance Committee in the Chamber of Deputies Jorge Estefan Chidiac, among other legislators, pinpointed this fact, since then and under this event, I represented the position of AMPI Cancun on this particular issue, my opinion has not changed since then, so it has changed, and it was pointed out on my potency, was the severity of the crisis and healthless: Mexico.
On September 2007, there were "serious" global economic vulnerability conditions, there were deceleration data existed in the major economies, already sketched a scenario of a food crisis due to the high demand for food from emerging economies in Asia (particularly China), and also had sufficient data on the performance of the U.S. economy, Iraq-Economy of Post War. In the case of Mexico and all Mexicans knew that PEMEX had collapsed through lack of investment. We already knew that.
At that time, the mayor banks and financial markets in the world did not break yet, "there was a calmness that boded storm”, the Mexican authorities' announcement was that it was requiring a substantive Tax Reform because Mexico" collected "very few in terms of PIB and that developed countries were paying much more, it means, Mexicans pay very little ...
In that potency, I noted with precision, that Mexico was a patient whose disease was not structural but of substance, that the IETU were not the solution, on the contrary, it was required primarily to recognize that Mexico is a Country dearly in terms of Cost Country, where we had to cut current spending, translate into infrastructure investment, that is, they had to go into the bowels to reconvert Mexico, that we had not time, that the IETU were as tall oil for a diarrhea patient, I mentioned that PEMEX was exhausted, that public companies PEMEX, CFE, LYF ... All that required a conversion because there existed the risk of losing them to unproductive, that all energy prices were so high that further aggravated the Cost Country , added to the net transfer of resources done every day by the Mexican Society to the public and private Mexican Oligopolies, which results in a higher Cost Country. Then Mexicans pay a 11 per cent of PIB as direct taxes and at the time, the same way to prices (the prices of public and private services in Mexico are the most expensive of the countries belonging to OECD) what makes us an economy "expensive and unproductive" hold only for the price of labor relatively "cheap" but not qualified, and also, that we would run the serious risk of losing jobs because of the lack of productive investment resources, and thus, it would generate more poverty.
I also stated in colloquial terms that Mexican businessmen, obviously, we would adapt as cockroaches to DDT (cockroach effect), which meant that on taxation was simply subtract liquidity to businesses, through to tax cash flow (IETU), the result would be more economic contraction and a severe drop in the welfare of Mexicans.
That day the president of the PRI, now Congresswoman Beatriz Paredes, in his speech gave answer to my potency by noting that the PRI would take responsible decisions on Mexico demands and, that the tax package (then 2008) would be taken as a responsible opposition that would give a confidence vote on President Calderón.
Note that the PRI acted in a consistent "policy" manner (voted in favor of reform above) to be a responsible opposition; however, that consistency is not necessarily a congruence political economy. Today, we know what happened, the sharpest contraction and economic crisis of the past eight decades, worldwide, the biggest decline in Mexico -12 percent of PIB and the significant increase of poverty (also added six million people to food poverty to reach 20 million and 50 million in extreme poverty) without precedent ...
Then, we propose the Economic Fiscal Package 2010 that includes tax increases to "fight" poverty, the disappearance of public authority (SRA, SECTUR and others) to reduce the cost effect, and I repeat those funds to combat poverty; would be worth examining further the item.
Thus the central proposal is to increase indirect taxes on consumption by two percent, directly taxing services such as telephone, internet and so on. Go back the same but putting it in another way: more cost country. We do not have to take a Ph.D. in Economics to point out that there is a wrong diagnosis of the economy and even worse, a bad prescription from the patient, in this case Mexico. Poor diagnosis because Mexico does not have right now enough encourage consumption and it is required to reactivate the economy, bad medicine with an increase in taxes because the economy will collapse further.
Bad Medicine when sending a decree canceling to the Senate in 2010 to the Agrarian Reform Secretary (SRA), considering that 72 percent of the Homeland is Ejido (precisely where poverty is concentrated), the ejidos in the country are not regularized, it means, the ejedidatarios own their land without a property title, the reform of 1992-1993 gave the "property" but not in full control and the process of adjustment is totally inadequate, thus generating more poverty, structural poverty.
Bad medicine also when canceling the Tourism Ministry since discourage investment in this sector, will generate a disruption to the point where top tourist destinations in Mexico (Cancun, Los Cabos, Ixtapa, Huatulco and Riviera Nayarit) may be orphaned as in Tourism Ministry's budget is included Fonatur budget and Tourism Promotion Council of Mexico. In other words, the tourism industry that had had positive results for the last four decades up to the influenza crisis, have we got to kick in the butt to devote resources to fight poverty? Sorry but I do not understand.... I got lost.
I have repeatedly stated that we cannot “fight” poverty, but you must create wealth to eradicate it, meaning a continuous and sustained economic cycle Savings-Investment-Jobs-Consumption and Reinvestment, which in Mexico, with remarkable ease, we have taxed discouraging the economic cycle to the point that today is jammed all productive activity. The best anti-poverty program is called: employment. (No subsidies to welfare programs generating more and more poverty).
Yes, pure and simple economics, that it is the reality, the world has a model that humanity chose to acquire goods and services, like it or not the model, it has passed the time of the discussion, it ended when the Berlin Wall fell down, the model is the market economy, yes, market share, it is supposed of not having monopolies-oligopolies, which is the state regulator, not a weak State, a State to rise to the occasion, with high-mindedness. It is obviously that our own "interpretation to the Mexican" to understand the market economy does not work, does not work.
"Can Mexico end the crisis? Yes, it can, the question is, how? Because we have a few decades (lost) doing the same as an economic recipe, the first thing we have to change is the economic attitude, not to stir political stuff, we have already swallow several doses (out of time) of bitter medicine, by the way, so bad ones and the patient does not get well, on the opposite, is dying. Do not repeat mistakes; make capital of what not to do, that's called historical experience. The change of attitude starts of all political and economic actors, giving the opportunity to a new "System-State Policy" to change the background and origin the "economic paradigm".
Firstly, make it very practical "praxis" to make it fast, there's no time, the patient is dying, we do not have "surplus, or resources," the economy with a decline of -12 percent of PIB, jobless, without investment, coupled with the various "contingencies" does not support anymore a decade to get agree with.
A first step is not to approve more taxes (or more weight) we have already enough highly complex. It is to do the opposite, to reduce the number of taxes, of special tax regimes of fiscal imposition because now has become a kind of Swiss cheese, leaving holes for the mess the mice (who seem indeed kangaroos), in fact, cut rates tax to encourage domestic markets, pauperized, jobless, lower rates, and to lower the tax complexity, simple, easy, payable by all without exception. Change from fiscal attitude of mutual suspicion and collection at all costs to the shared responsibility of all Mexicans.
Strengthen Federalism much ballyhooed, the reality of Mexico is that today there are many different “Méxicos”, prompting Fiscal prosecutors with greater powers, with greater accountability and transparency to States and Municipalities, the 70 percent of the Municipalities, most of the States are broken and in debt, face States and Municipalities not like children or adolescents, but as responsible adults. Change in attitude from obese-bureaucratic governments to a dynamic and efficient governments.
Animate the Development Bank, the Commercial Banking and financial markets, giving priority to productive investment, venture capital to private sector investment in infrastructure. Today we have a development and commercial Banking completely passive, because the development one does not fit to the development and the commercial abdicated its fundamental task of providing financial services to its customers, because very comfortably served mostly credit the government in its three levels with rates very comfortable ones, "safe on relatively", with an exceptional charging commissions and fees, paradoxically contributing to deepening the crisis. It needs a change of attitude passing from a passive Bank to a promoting Bank of the development of productive investment.
Slimming at all three levels and three branches, not as cosmetic as intended with the current proposal which encourages poverty, on the contrary, wisely which substantially reduces the electoral cost (the highest in the world) and the cost of legislation. In Mexico we have about six thousand members from magistrates to local representatives in all 32 States, in their local Congresses, and obviously the 500 we have in San Lázaro. The theme of this issue is closely related to the electoral cost, and the Judiciary anachronistic, all untimely, the court costs and outcomes are markedly "slower" fostered greater social inequality. It requires a change of attitude to move from a State reform pending to a substantive reform of the real State of substance to help deflate the great cost country we have carrying as a headstone, which drains every day, with the possibility of a real model of development and productive investment.
Mexico's current spending grew in the last 10 years, than ever in its history, we squander the resources available to pay the high cost country, we did not seize the historic opportunity to "invest" in infrastructure, net capital investment is very low in proportion of current expenditure.
Public and private infrastructure postponed for priority current spending, so the hunger to increase the "recovery" to solve, in the very short term, the resources flows to “return them to squander?
The dynamics that have adopted the world's economies have correctly interpreted the "time" is exactly to "invest" even with deficit, in solid infrastructure, giving priority to investment and not expenditure. Mexico can and must change, that was the mandate from Mexicans on July 5th, I am sure that the "correct interpretation" it is an extraordinary possibility of the current "National Debate" will be politically victorious the political party to take the right-urgent measures, necessary to give effect to a solid "State policy", that does not generate more poverty, oriented to a continous sustained growth, impulsing productive employment, sound and competitive, eliminating private and public monopolies-oligopolies costs, solid and strengthening all regions, solid and enhancing human capital, the ability of all Mexicans, just solid and equitable distribution of the resources, generating welfare.
I am convinced that Mexico and all Mexicans can do. |
