PAN: “No Plan B for the poor”

The federal government does not have a backup plan in case opposition legislators reject its budgetary proposals for 2010, says the leader of the National Action Party (PAN) parliamentary group, Josefina Vázquez Mota.

The administration’s economic package proposes imposing a general two percent tax, which would apply to food and medicine.

…

“We are going to watch the discussion and debate,” she said. “And surely from there we will start paying attention to other considerations, but for the moment we have no Plan B. Instead, we want to step back and allow a responsible discussion on the administration’s proposal.”

(Ivonne Reyes Campos, The [Mexico City] News)

Although the Administration is also suggesting that there are no alternatives to a two percent raise in the IVA (Value-Added tax) given the drop in oil revenue, the “take it or else” nature of the proposal has already aborted the idea, and —  like it or not — several plan Bs already exist.

Although the tax increase was praised by the likes of Standard and Poors,  your standard poor Mexican is calling it bullshit.    With no increase in wages, “small” increases (bus fares here in Mazatlan went up twelve percent at the beginning of the month) are an immediate hardship.  The new “poor tax” would also apply to previously untaxed items — food, medicine and school supplies — things that the poor cannot do without, and are already stinting on.

The proposal was D.O.A. as soon as it hit the media, and discussion has hardly been limited to the wonkish back pages of financial papers.  This hits the voters hard, and has already got the PRI (and PRD) casting about for both political advantage and — catching the administration flat footed — probably forcing the administration to give up on its own neo-liberal biases and give up on the economic dogma pursued by PAN and the “technocratic wing” that ran the PRI since the 80s.

While lower level state employees have taken the brunt of the cuts (I’m hearing of government employees being told to bring their own toilet paper to work) within the federal budget, the administration has yet to reign in salaries and benefits at the top.   This is a populist austerity measure that — naturally — the “ins” never seem to get around to considering.  However, being in the unusual position of having a divided legislature and executive, it might be possible for one branch or the other to cut the salaries of the other branch… or better, for either (or both) to involve the judiciary and gang up on each other.  Maybe, if everyone’s lucky, they’ll get into revenge salary cuts.

Those savings might not be as substantial as they are symbolic, and I know they were part of the “other presidency’s” proposals back in 2006, but it’s not the only one of the Lopez Obrador proposals that are being reconsidered (although not touted as such).  Luxury taxes (including that on large engine foreign cars — which was proposed as a environmental tax) — were eliminated under the Fox Administration, and are less painful to most than taxes on food.  Everyone eats, but only a few drive Escalantes.

And, there is always income tax. Or going into debt.  Or both.