Mexico presidency hopeful eyes tax cuts to counter Trump reform

[December 05, 2017]   By Christine Murray

MONTERREY (Reuters) - A Mexican presidential hopeful and governor of a wealthy border state said he would cut taxes to compete with lower rates in the United States if President Donald Trump's fiscal reform passes Congress, hinting at a broader potential response in Mexico.

Jaime Rodriguez, the governor of Nuevo Leon who is seeking to become the first independent to take the presidency, said he would lower "many taxes" if successful.

"We're going to compete," he told Reuters on Monday. "If I make it and am able to be president, I would lower taxes," he added, though he declined to give details.

Mexico's government has been watching Trump's fiscal plans closely, and some senior officials and lawmakers say the country may have to cut taxes if the United States does.

The U.S. Senate approved a bill on Saturday that could see corporation tax slashed to 20 percent from 35 percent, raising questions over whether this could make investment in Mexico, where the corporate tax rate is 30 percent, less attractive.

Two years ago, Rodriguez pulled off a surprise win with a social media-led campaign and became the first independent governor of a Mexican state.

Nuevo Leon, home to the major industrial hub of Monterrey, has been one of the biggest beneficiaries of the North American Free Trade Agreement (NAFTA), which spurred an influx of investment from companies seeking access to U.S. consumers.

Jaime Rodriguez Calderon, governor of Nuevo Leon state, looks on during an interview with Reuters at the Government Palace in Monterrey, Mexico, December 4, 2017. REUTERS/Daniel Becerril

That included a $1 billion investment from South Korea's Kia Motors under a 2014 deal, although Rodriguez and others were critical of the incentives the company received.

"We don't want any more car assembly plants," he said. "We won't give incentives like the ones we gave to Kia to any other company, it's excessive."

Trump has threatened to withdraw from NAFTA if he cannot rework it in favor of the United States.

However, Rodriguez, who in May 2016 predicted that Trump would win the presidency, was adamant that NAFTA would survive.

"It's not going to collapse," he said.

Known in Mexico as "El Bronco" due to his blunt style, the 59-year-old Rodriguez leads aspiring independents to gather the 866,593 signatures needed by Feb. 19 to get on the ballot for the July 1 election, according to statistics from electoral regulator INE.

However, he has reached the threshold of 1 percent of voters in just three states, and the law requires getting that share in 17 states. Polls so far suggest Rodriguez is unlikely to mount a serious challenge for the presidency.

(Editing by Dave Graham and Richard Borsuk)

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