MEXICO: Fox suspends controversial import taxes on sweeteners and luxury goods
Mexican president Vicente Fox issued an executive decree on Tuesday to suspend a controversial 20% import tax on the US high fructose corn syrup, a widely used ingredient by the soft drink industry.
The country's Congress introduced the tax in January in a bid to boost the domestic sugar industry, which is struggling under the weight of a growing surplus that now stands at around 600,000 metric tons. For the last four years, the Mexican government has petitioned the US to increase its quota of sugar from Mexico.
It is hoped that the suspension, which will run for seven months, will give more time to negotiate a deal to grant Mexico greater access to the US sugar market in accordance with certain commitments in the North American Free Trade Agreement (Nafta).
Fox also exempted shops within the Baja California state and 12 miles of the US border from a 10% luxury goods tax. This was done in a bid to encourage consumers to spend on items such as caviar and Rolex brand watches within Mexico rather than on trips to the US.
The 60% import tax on alcoholic beverages, including tequila, was also lifted.
In accordance with the Mexican constitution, Fox can eliminate taxes without legislative approval only if he can demonstrate that domestic industries will be harmed by the tax.
Opposition legislators of the Institutional Revolutionary party (PRI) reacted negatively to the move, however, insisting that Fox has overstepped his jurisdiction. Some said that they would challenge the decree in the Supreme Court.
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