By Anthony Esposito
MEXICO CITY, Jan 11 (Reuters) – Mexico’s finance minister on
Thursday labeled the U.S. tax law overhaul passed by Congress
in December as “regressive” and said the Mexican economy would
remain competitive without sweeping cuts to corporate tax rates.
The Republican-controlled U.S. Congress defied opposition
from Democrats to pass the bill and give President Trump his
first major legislative victory.
The overhaul cuts taxes for corporations and the wealthy
while giving mixed, temporary tax relief to middle-class
Cutting the U.S. corporate tax rate to 21 percent from 35
percent has sparked concern among Mexican companies and some
lawmakers that it could lead to less investment reaching Latin
America’s second biggest economy.
However, Finance Minister Jose Antonio Gonzalez Anaya argued
the changes could make the U.S. economy overheat and said his
government did not want to copy Trump’s overhaul.
“It’s a very regressive reform: the top one percent of
earners will get 40 percent of the benefits,” he said at an
event in Mexico City. “It’s not exactly something we want here.”
What makes a country competitive is not simply a matter of
taxation, said Gonzalez Anaya.
“If that were the case the countries with the lowest tax
take would be the most competitive,” he said, citing Haiti and
Bolivia as examples in the Americas. “They aren’t exactly the
most competitive countries in the hemisphere.”
Still, automaker Fiat Chrysler said shortly after Gonzalez
Anaya spoke that the U.S. tax overhaul had partially enabled the
company to boost investment in its U.S. manufacturing operations
and grant a bonus payment to workers.
The minister said that since the United States is near full
employment the overhaul’s impact on economic activity would be
“limited”. It could, however, make it overheat, he added.
“That would force the Federal Reserve to act more quickly
than it’s been doing up until now,” he said.
(Editing by Dave Graham)