(Updates to add Pena Nieto quote in fourth paragraph.)
March 3 (Bloomberg) -- Mexico’s ruling party took today the first step to back President Enrique Pena Nieto’s plan to end a 75-year-old state monopoly on the oil industry.
The president’s Institutional Revolutionary Party, known as PRI, voted today at its national assembly to end its opposition to constitutional changes that would ease state-owned Petroleos Mexicanos’s grip on the oil industry. Pena Nieto hasn’t yet presented a bill proposing the changes and would still have to win the votes in Congress, where his coalition controls 241 of 500 seats in the lower house.
Oil output in the world’s ninth-largest producer of crude has fallen for eight years as Pemex finances a third of the government’s public budget. Opening the industry to foreign investors would boost production while lifting economic growth by as much as 2 percentage points each year, according to the Energy Ministry.
“Our party is transforming itself in order to represent and better serve all Mexicans,” Pena Nieto said at his party’s assembly. “The PRI, without falling into complacency, has opted to examine itself and redefine its position to adapt to the nation’s new circumstances.”
The PRI also ended a ban that prohibited its members from voting for taxes on food and medicine. The changes were approved today at the party’s national assembly.
Tax on Food
Pena Nieto, 46, has pledged to open the oil industry to more competition, to reduce the tax burden on Pemex and to increase government revenue in a bid to boost economic growth. His administration hasn’t yet disclosed details on the proposals it said will be sent to Congress this year.
PRI lawmakers have been debating recently whether to tax food and medicine, currently exempt from tariffs, to make up for revenue shortfalls that may result from lower taxes on the oil industry. The measure would be part of larger efforts to lift tax revenue that accounts for 18.1 percent of gross domestic product, the lowest ratio among 34 member countries of the Organization for Economic Cooperation and Development, according to data from the group.
--With assistance from Andrea Jaramillo in Bogota, Carlos Manuel Rodriguez in Mexico City and Andre Soliani in Brasilia. Editors: Andre Soliani, Theo Mullen