UPDATE 2-Mexico's lower house of Congress OKs revised tax plan
MEXICO CITY, Oct 17 (Reuters) - Mexico's lower house of Congress gave general approval on Thursday to a revised government tax plan that aims to boost receipts by nearly 3 percent of GDP by 2018.
Presented last month, President Enrique Pena Nieto's plan to strengthen Mexico's weak tax receipts ran into opposition from business groups and conservatives in Congress, prompting lawmakers in the lower house to propose stripping divisive items from the bill.
The bill was revised on Wednesday to raise the top income tax rate on a sliding scale to 35 percent from 30 percent, impose a 5 percent tax on junk food and roll back plans to apply sales tax to rents, mortgages, property sales and school fees.
It must still be passed by the Senate, which is expected to approve the reform by the start of November. It is tied to the 2014 budget, which must be signed off on by mid-November.
Finance Minister Luis Videgaray said earlier on Thursday the revisions would leave the government with a revenue shortfall of 55.7 billion pesos ($4.4 billion), which the government is expected to seek to plug by raising its oil revenue forecast.
Mexico relies on revenues from state oil monopoly Pemex to generate about a third of federal tax receipts, and the 2014 budget had projected an average oil price of $81 per barrel.
Lawmakers in the ruling Institutional Revolutionary Party, or PRI, have said Congress could ratchet up the estimate for next year to $86 a barrel, the benchmark for this year.
Videgaray said the cuts to the tax reform meant it would only improve Mexico's tax take by about 1 percentage point of GDP in 2014, 0.4 of a point less than originally planned.
But it would still yield an additional 2.8 percent of GDP by the time Pena Nieto leaves office in 2018, the minister added.