Mexico’s legislature approved major overhauls of the nation’s tax and election laws Friday, untangling a months-long stalemate that had threatened to make the country ungovernable in the wake of last year’s bitterly contested presidential election.
Longtime rivals crafted the compromise in weeks of highly sensitive talks that gave President Felipe Calderon’s conservative National Action Party, or PAN, the tax reform it had sought for more than a decade. The leftist Democratic Revolution Party, or PRD, which accuses Calderon’s party of stealing the 2006 presidential election, gained tough new limits on negative campaign advertising and a purge of top election officials.
Friday’s votes showed that Calderon is a more savvy political operative than his predecessor, Vicente Fox, who struggled to advance his agenda during his six-year term. A PAN veteran experienced in rough-and-tumble politics, Calderon was willing to compromise with PRD leaders even as they attacked him in public as an “illegitimate” leader.
At the same time, PRD moderates gradually and quietly distanced themselves from defeated presidential candidate Andres Manuel Lopez Obrador, who proclaimed himself Mexico’s “legitimate” president after last year’s vote.
“With the approval of these reforms, Mexico will be stronger in its public finances and stronger in its institutional life,” said Calderon, who declared that he’d sign both sets of legislation.
The tax reform eliminates loopholes in corporate taxes, creates a new tax on cash deposits, and increases the gasoline tax by 5.5%. Analysts said it may allow Mexico to survive a looming fiscal crisis caused by declining production from the country’s government-run oil fields, a crucial source of public funds.
The new tax measures are expected to increase government revenue by about 5%, adding about $10 billion annually to the public coffers. Tax collectors will get more funding to crack down on widespread tax evasion, which the newspaper El Universal in an editorial Friday called “the second national sport” after soccer.
The electoral reform seeks to rein in political campaign spending by giving all candidates free access to the airwaves. Supporters of the reform said it would level the electoral playing field. Calderon is widely believed to have won the July 2006 election with a sophisticated and well- financed media campaign that gradually eroded the leftist candidate’s large lead in the polls.
The electoral measures consist of legislation and eight constitutional amendments that gained the backing of all three of the country’s leading political parties: the PAN, the PRD and the Institutional Revolutionary Party, or PRI, which have almost equal representation in the Mexican Congress. The amendments are expected to be ratified quickly by Mexico’s states.
The president praised “the responsibility and high-mindedness” of the Senate and the Chamber of Deputies, the upper and lower houses of Congress.
“I repeat the promise of this government to invest these additional resources in the infrastructure, education and health programs that the neediest Mexicans require,” Calderon said.
Under the electoral reform, all broadcast outlets wil be required to provide 48 minutes each day free to political campaigns. The time will be divided among legally registered political parties based on their share of the vote in the most recent election. Mexico’s television and radio stations will be prohibited from selling airtime to candidates. The presidential campaign season will be shortened from 186 days to 90 days.
Mexico’s media giants Televisa and TV Azteca opposed the move. But Jose Woldenberg, a former head of Mexico’s Federal Electoral Institute and a respected voice on election issues here, said the reform would be a step forward.
“The democratic life of the country is the winner, because there will be better campaigns and less campaign spending,” Woldenberg said.
For more than a year, the Chamber of Deputies, in the San Lazaro district of Mexico City, had been a forum of discord. More than once, rival legislators pummeled and wrestled one another over control of the dais.
But this week, Mexico’s political journalists took delight in describing the art of the political deal, something rarely seen in a country where multiparty democracy has taken hold only in the past decade as the PRI lost its grip on power.
The Senate had approved the electoral reform Wednesday and the Chamber of Deputies had approved the tax reform Thursday.
“It was a day of great expectation . . . but as the session opened, it was clear that everything would go forward without incident,” El Universal wrote, describing the vote to approve the tax reform in the Chamber of Deputies. “As they say in the argot of San Lazaro, everything was ‘ironed out.’ ”
On Friday, the Senate took up the tax reform and the Chamber of Deputies took up the election reform bill.
Juan Guerra, a PRD congressman, said the election reforms would liberate politicians from the “feudal lords” of Mexico’s media conglomerates.
“Today we are completing a rebellion of the serfs,” he said. “Today, Mexicans who don’t have money to pay for media campaigns will be able to run as candidates.”
The reform will also gradually replace all the commissioners of the Federal Electoral Institute, which supervises all elections. The PRD had accused the institute of favoring conservative candidates by failing to act when Calderon launched “slanderous” attack ads against PRD candidate Lopez Obrador.
The reforms approved Friday were a tacit recognition by the legislature that some of the PRD’s criticisms of the 2006 election were justified. Such a concession was the political price Calderon had to pay to get his tax reform.
“We won’t let the tax reform be debated if the electoral reform isn’t,” Javier Gonzalez Garza, another PRD congressman, said this month. “The two reforms go together. If there is no electoral reform, you can forget about the tax reform.”
The tax reform includes a new tax on cash deposits, a measure seen as targeting Mexico’s vast informal economy. Cash deposits to banks exceeding $2,300 per month will be taxed 2%.
New restrictions were also placed on corporate tax deductions, a measure aimed at reducing tax evasion at the other end of the income spectrum as well.