By RICARDO CASTILLO
The much-expected ideological clash between Mexican business and government is now here. It had not happened before because there had been civility on the part of the business community regarding the authentic democratic victory achieved by President Andrés Manuel López Obrador (AMLO) in July 2018. But it is now apparent that the business-AMLO friendly relationship may be, if not over, very close to a separation.
Things are happening fast, and here are some of the issues over which the two sides differ:
The first riff broke out on Friday, March 20, when the think tank of the Business Coordination Council (CCE), headed by Carlos Salazar, the Center for Economic Studies of the Private Sector, “demanded” that, given the growing Covid-19 pandemic – it’s not fully hit Mexico, yet – AMLO suspend the construction of the new Santa Lucía airport to the north of Mexico City, “temporarily” layoff the building of the Dos Bocas refinery in Tabasco, and wait and see what happens before pushing the revamping and expansion of the Maya Train project.
In case you’re not familiar, these are AMLO’s three pet projects and were his campaign promises. López Obrador promptly retorted on Monday, March 23, that “none of the strategic projects of the government of the Fourth Transformation of Mexico will be cancelled or postponed in spite of the economic crisis the novel coronavirus pandemic may bring about.”
On the other hand, the CCE sent the Treasury a list of tax-related demands to provide immediate support in order to preserve jobs and business operations given the upcoming pandemic, according to CCE president Carlos Salazar, who was reelected to the post last week.
“We’re not talking about anything that’s not happening in other parts of the world,” Salazar said. “The government should support business so that business can support employment. This is not finacnial stimuli for the companies to make more money, but just to preserve jobs.”
AMLO responded that the government will not lower nor condone taxes to big business-
However, in the meantime, 10 of the 12 big auto industry assembly plants in Mexico have stopped production, both for workers’ safety and because the auto parts supply chain from the Far East is not operating like it should, on time.
Salazar said that “we’ve been very clear about having a stimuli to the income tax on wages, under for minimum wages, and we have made a calculation of how much that would cost.”
He went on to say: “The one who have to crush the numbers and know best how to calculate taxes is the Finance Secretariat. We feel it is extremely important for consumers to have cash in their pockets.”
The response to the tax cut request is expected for Wednesday, March 25, and maybe it will be presented by the National Palace’s chief of staff and financial advisor to AMLO, Alfonso Romo.
Notwithstanding, AMLO said flatly that he is against lowering taxes, He said his administration is now working on an “alternative plan.”
“We are working on a plan that is different to the recipes that used to be applicable in times of crisis,” the president said. “For example, Mexico always appealed for credit from the International Monetary Fund. Fortunately, we don’t have the need to do that because we’ve got (international) reserves. We have savings with which we can finance our own development.”
Definitely, these are days of debate on how to manage the government, and private investors obviously don’t agree with AMLO’s statement, that if there is anyone that’s he going to get help, “it will be the poor.”
For AMLO’s politics, the poor are where the votes are. but business, which stands to lose a mint with the growing crisis, are demanding protection too.
Will it come?