MINISTER SEES MEXICO LEAVING VAT IN PLACE

MINISTER SEES MEXICO LEAVING VAT IN PLACE

The need to foster domestic savings outweighs the need for possible stimulus to consumer spending, and Mexico is likely to leave in place its 15 percent value-added tax, Finance Minister Guillermo Ortiz told gathered U.S. business representatives Tuesday.

Speaking to a breakfast meeting of the American Chamber of Commerce of Mexico, Mr. Ortiz discounted the possibility of quickly returning to the pre- March, 10 percent value-added tax.The Mexican tax structure "is low in relation to almost whatever country that has a comparable economic grade," Mr. Ortiz said.

He said he expected inflation in August to dip below 2 percent. That would be a milestone in the government's recovery efforts after the botched Dec. 20 peso devaluation. The central Banco de Mexico reported Monday that inflation was 1.01 percent for the first half of July, and the rate is expected to be around 2 percent for the month. June inflation was 3.2 percent.

The finance minister cited mounting unemployment as the biggest problem now for the government. He also announced that Mexico is seeking to place $500 million in sovereign debt in the Japanese marketplace.