Sunday, June 8, 2014

Mexican Church calls Peña Nieto tax reforms "deceptive economics," harmful to the middle class

Guadalajara -
The powerful Archdiocese of Mexico City is cutting no slack to the 18 month old administration of Institutional Revolutionary Party president Enrique Peña Nieto, lashing out at his reform dominated agenda every few weeks in its Sunday editorials, published in the influential Catholic journal Desde La Fe (From the Faith).

Today the topic was the nation's staggering economy, which has been grossly underperforming for the last year. Despite promises that 2014 would be a banner year - the same promises the government made in early 2013 - the economic engine is badly misfiring, and nobody seems to be able to fix it. Mexico slashes 2014 growth projection.

In comments which may surprise many, the Church today stood up for Mexico's middle class, not its most impoverished (about 45% of the nation). Calling the middle class the "productive sector," it said they have been greatly damaged by the PRI administration's tax and fiscal policies. Here is what the Archdiocese wrote (translated and edited for clarity):

"As a result of the so-called tax and fiscal reforms passed last year, which ended up being a series of patchwork fixes rather than the real reform which Mexico needs, the country's economy is stagnant, producing very little.

"The government's plans have been put into play at a very high cost for most, especially those in the middle class and those who are captive contributors to the tax collector, as well as those who might otherwise have been motivated to invest in productive enterprises. Everybody has felt the weight of increased taxes which have no clearly defined purpose, reducing their capacity for self-sustenance and subjecting them to a series of complicated internal revenue laws - at times under the threat of criminal enforcement.

"In the meantime, thousands of small businesses and the self-employed remain completely beyond the control of government officials and beyond the reach of the tax collector - they are not regulated by anybody. This so-called informal economy is growing wildly, with 60% of the active labor force entirely outside the internal revenue system, contributing in no way to the national economy or to the social obligations which every country must address. (Mexican economy continues to shed jobs).

"The net result is that we remain far below the average levels of growth seen in Central America and the majority of so-called emerging economies.

"Without sustained economic growth there will be no jobs, no national well-being, no social justice. We acknowledge that the government has shown a considerable preoccupation with public policies focused on society's most marginalized, on those who cannot feed themselves or their families, with food programs and the like. But those same policies have been carried out in a way which burdened unnecessarily the productive class, throwing out a magnificent opportunity to ignite the economy.

"Real fiscal reform will have to await another day, for a plan which can stimulate genuine economic development with strong incentives for those who want to work while contributing their fair share, and for those who want to invest in our nation."

Norberto Rivera Cardinal Carrera is the Primate of Mexico and the Archbishop of Mexico City

Aug. 13 - Mexican economy remains stuck on a southbound train
Mar. 3 - Mexican Church has harsh words for government over El Chapo Guzmán's capture, and official corruption

© MGR 2014. All rights reserved. This article may be cited or briefly quoted with proper attribution or a hyperlink, but not reproduced without permission.

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