Mexican president promises to promote auto industry

13:42, June 25, 2010      

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Mexican President Felipe Calderon said on Thursday his government would abolish a key tax on vehicle ownership starting on on Jan. 1 next year as part of a series of measures to help the nation's auto industry.

During the remainder of this year, the central government will pay the tax for new vehicles that cost 250,000 pesos (around 19,600 U.S. dollars) or less, bought by individuals in Mexico.

Companies will be able to write off the full value of cars under 250,000 pesos against tax.

"By eliminating this tax we are supporting Mexican auto industry and we are also helping low income Mexican families," Calderon told a press conference at his official residence, Los Pinos, in Mexico City.

Many states are dependent on the tax and Mexico City has already promised to replace the general ownership tax with a progressive tax that targets the cars that pollute most.

"We seek to support the auto industry and low income consumers, while giving a renewed boost to our economic recovery," Calderon added. He described the auto industry as vital for Mexico, which generates 20 percent of the nation's gross domestic product and 11 percent of its industrial jobs.

Mexican auto sales were just 3.6 percent higher during the first five months of this year compared with the same period last year, according to the Mexican Auto Industry Association (AMIA).



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