Mexico's Next Finance Chief to Fight Use of Co-ops to Evade Tax

(Bloomberg) -- Mexico’s next president, Andres Manuel Lopez Obrador, plans to fight tax evasion and boost revenue by clamping down on companies that take advantage of special rules for cooperatives to avoid paying tax, according to his pick for finance minister.

The next government will put an end to use of cooperatives by “unscrupulous people” to evade tax, Carlos Urzua told reporters late Friday. Cooperatives don’t generate profit in principle and aren’t part of the general tax regime for corporations.

Increasing revenue to finance his spending policies is one of the challenges facing Mexico’s president-in-waiting. Lopez Obrador has pledged not to raise taxes and says money saved from curbing corruption can finance his spending plans, which include higher outlays on infrastructure and social benefits.

Agricultural cooperatives operating in the shadow economy are among those groups that should be paying tax, Urzua said.

Lopez Obrador’s government will prioritize production of a basket of farm goods and take measures to increase their production, Urzua said. The list includes corn, beans, wheat for making flour, rice, tuna and sardines.

The government should give poor farmers fertilizer instead of money to enable them to increase production, he said.

--With assistance from Nacha Cattan.

To contact the reporter on this story: John Quigley in Lima at jquigley8@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Bernard Kohn, Kenneth Pringle

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