March 13, 2017 / 6:35 PM / 5 months ago

Mexico says has less space than U.S. for tax reform

Mexican Finance Minister Jose Antonio Meade in Mexico City, Mexico January 30, 2017.Carlos Jasso

MEXICO CITY (Reuters) - Mexico's Finance Minister Jose Antonio Meade said on Monday that Mexico was analysing how to respond to U.S. tax proposals, including a border adjustment tax, but that Mexico has less fiscal space than the United States to enact reforms.

Mexico's debt levels have risen sharply in recent years and the government has promised to cut spending this year and reach a primary surplus.

"The United States has more possibility to issue debt than Mexico," Meade said on local TV.

He said that there were currently no plans to raise taxes in Mexico, but that the government was still analysing how to react to potential U.S. tax measures.

"So far all we know are just sketches of (U.S.) proposals. So in front of each draft proposal we are evaluating what the impact might be," Meade said.

Meade said that a proposed border adjustment tax (BAT) "would be like a tariff on all goods entering the United States" but that it was not Mexico-specific.

Since such a tax would effect the whole world, Mexico would have to study how it could respond to such a move, he said.

Meade reiterated that Mexico had been clear that it would not accept Mexico-specific tariffs or import quotas in talks with the United States to renegotiate the North American Free Trade Agreement (NAFTA) that also includes Canada.

Meade said that U.S. Commerce Secretary Wilbur Ross's comments that the U.S. was looking at making changes on the rules that determine how much of a product must be sourced within North America as well as dispute resolution rule.

Meade said that, based on Ross's comments, it did not appear that the United States was thinking in terms of Mexico-specific measures such as tariffs or quotas.

Reporting by Frank Jack Daniel; Editing by Bernard Orr

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