Magazine article SourceMex Economic News & Analysis on Mexico

Chamber of Deputies Approves Taxation Powers for Cities

Magazine article SourceMex Economic News & Analysis on Mexico

Chamber of Deputies Approves Taxation Powers for Cities

Article excerpt

In mid-June, the Chamber of Deputies overwhelmingly approved an initiative to empower municipal governments to propose a local system of taxes and gain control over key functions such as public safety and sewerage and water systems.

The initiative, which involves six reforms to Article 115 of the Mexican Constitution, passed by a 387-17 vote with 24 abstentions. The bill was promoted by the center-right Partido Accion Nacional (PAN), but received broad support from all legislative delegations.

A key section of the bill gives mayors the prerogative to impose taxes on businesses and state-run agencies that operate within their city limits, including PEMEX and the Comision Federal de Electricidad (CFE). Previously, these taxes were controlled by the federal government and in some instances by state authorities.

Proponents of the bill said the measure could potentially double tax revenues for many cities. However, mayors would not have the power to unilaterally enact taxes and tariffs, since any taxation measures would have to be approved by the state legislatures.

Still, several PAN governors including Fernando Canales Clariond (Nuevo Leon) and Alberto Cardenas Jimenez (Jalisco)

lobbied against the initiative because the bill would transfer some state powers to city governments.

Among other things, the measure gives mayors the right to control land use within city limits and allow greater administrative control of certain public utilities such as sewerage and water. In addition, all major cities except Mexico City would gain control over some public-safety agencies that were previously controlled by either a federal or state government agency. …

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