Mexico must charge more IVA and reduce Income Tax.

MEXICO CITY, Oct 17, 2003 (Cronica/Corporate Mexico by Internet Securities, Inc. via COMTEX) -- The company Ernst & Young (E&Y) considers that fiscal reforms including the standardization of IVA national sales taxes at 10%, and its extension to foods and medicines would be helpful for next year's government finances and even employment.

Jaime Rojas, tax specialist at E&Y, warned that if the measure is implemented tax revenues would increase and if a reduction in Income Tax (ISR) was aggregated for companies to invest, more personnel would be required for production.

Rojas also said that Mexico must start to collect more IVA and less ISR, and when revenues improve the process should be reversed.

"The problem we have experienced is wanting to have a tax reform that produces a lot of money overnight. I think that it is not like that. The tax reform requires a gradual process that allows us to know the way forward for the next 10 or 15 years," said the specialist.

E&Y also said that the tax reform proposal initially made by the Treasury Secretariat was a good idea. This would allow states to apply differential IVA rates of their own volition.

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