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Mexico cheers higher taxes

Dan Grech May 31, 2007

TEXT OF STORYSCOTT JAGOW: The stock market in Mexico shot up to a record high yesterday. But get this: The reason is that Mexico’s president wants to change the tax code and companies might have to pay more taxes. So why are investors happy about that? Dan Grech explains from our Americas Desk at WLRN.

DAN GRECH: Mexico is the world’s 13th-largest economy. But when it comes to the country’s ability to collect taxes, it’s right down there with Kazakhstan. Just one-half of Mexican workers bother paying taxes.

But Mexico hasn’t doesn’t anything to reform its tax system for decades.

HANS BELCSÁK: Probably the last time would be the value-added tax change that was back in 1980.

Hans Belcsák is president of Rundt & Associates, a risk-assessment firm. He says companies are rooting for tax reform.

BELCSÁK: It’s been a long-pending issue. And if it’s finally resolved, then I think for many companies the certainty is better than the continued uncertainty.

More tax revenue would mean better roads, schools and hospitals — and a better environment for doing business.

I’m Dan Grech for Marketplace.

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