- Mexico's ruling party opens door to tax, energy changes
- Recovery effort ends for Florida man presumed dead in sinkhole
- A push for change in China as new leaders take the helm
Posted: 02 Mar 2013 08:33 PM PST
MEXICO CITY (Reuters) - Mexico's ruling Institutional Revolutionary Party paved the way on Saturday for possible tax hikes and an overhaul of state oil giant Pemex as it seeks to spur growth in Latin America's second-biggest economy.
PRI delegates at a congress in Mexico City voted to change the party's position on refusing to consider the imposition of a value-added tax on food and medicine, and giving the party scope to open up Pemex to more private capital.
President Enrique Pena Nieto wanted the changes, which run contrary to many old tenets of the PRI, so he would have more room to manoeuvre in boosting Mexico's low tax take and revamping its flagging oil industry.
PRI Congressman Javier Trevino said the changes would allow Mexico to modernize its tax system and energy sector, and give it a chance to devote more resources to helping the poor.
"This is a good signal," he said, adding the modifications would allow the PRI to push for constitutional changes to entice foreign investors to the energy sector.
The centrist PRI lacks a majority in Congress, and is likely to face months of tough negotiation before it can lay out detailed plans on tax and energy reform. Those measures are expected to be presented in the second half of this year.
No party has had a majority in Congress since 1997, hindering efforts to enact major change on tax and energy law.
But Pena Nieto surprised many critics when he unveiled a broad pact with the main opposition parties to work together on economic reform shortly after he took office in December.
PRI financial experts are looking at ways of raising the Mexican tax take - currently the lowest in the Organization for Economic Cooperation and Development as a proportion of gross domestic product - by up to 6 points of GDP.
Applying VAT to food and medicine is controversial because the burden would fall most heavily on the poor, about half the country's population. PRI lawmakers say a large chunk of any additional revenue generated must go toward helping the poor.
One option under discussion is applying a reduced rate of VAT on food and medicine. But even if the full rate of 16 percent were levied, it would only boost the tax take by about 1 percentage point of GDP.
In its revised platform, the PRI agreed the state would remain in control of Mexico's energy resources. But it added a section saying it would "design mechanisms to generate greater private-sector participation in energy production."
"But this isn't giving oil to foreigners," said Eduardo Bernal, a PRI delegate at the congress.
Cutting fiscal loopholes, getting the millions of workers in the underground economy - nearly a third of the labour force - to pay taxes and improving states' tax-raising ability are among the measures the government is weighing to increase revenues.
The PRI, which ruled Mexico from 1929 to 2000 before regaining power last year, blocked efforts by the conservative National Action Party, or PAN, to extend the VAT to food and medicine during the previous 12 years.
Since the party recaptured the presidency, its leadership has made the case for sweeping change to bolster the economy, which underperformed its main regional peers under the PAN, growing about 2 percent annually for most of the past decade.
Overhauling Pemex, a symbol of Mexican self-reliance that provides a third of the federal tax haul, is particularly sensitive for the PRI, which created the company when President Lazaro Cardenas nationalized the oil industry in 1938.
Output of crude has slumped to less than 2.6 million barrels a day from 3.4 million in 2004, and lawmakers worry the oil industry will be left behind unless it can improve performance.
"We plan an energy reform that mulls an opening in areas where we don't have the capacity to do it, so Pemex can make alliances with private capital," said Marco Bernal of the PRI, head of the energy committee in the lower house of Congress.
Pena Nieto aims to make the monopoly more efficient and more independent. He has taken inspiration from Brazil's state-controlled oil firm, Petrobras, part of which has been publicly listed, and said in January the two might pursue joint projects.
But he has had to defend his administration from accusations he plans to privatize the oil industry.
(Writing by Dave Graham; Editing by Xavier Briand and Peter Cooney)
Copyright © 2013 Reuters
Posted: 02 Mar 2013 07:26 PM PST
SEFFNER, Florida (Reuters) - Florida rescue workers ended their efforts on Saturday to recover the body of a man who disappeared into a sinkhole that swallowed his bedroom while he slept and will demolish the suburban Tampa home due to its dangerous conditions, a rescue spokeswoman said.
Two nearby houses have been evacuated because the sinkhole has weakened the ground under them, and their residents probably will never be allowed inside again, said Jessica Damico of Hillsborough County Fire Rescue.
Jeff Bush, a 36-year-old landscaper, is presumed dead after vanishing into the sinkhole that opened suddenly beneath his room on Thursday night. Five other people in the house were getting ready for bed when they heard a loud crash and Jeff screaming.
His brother was rescued after jumping into the hole and furiously digging in an effort to find him.
Authorities used listening devices and cameras at the scene of the 30-foot (9-meter) wide hole in the ground but detected no signs of life.
"There's nothing compatible with life in this situation," Damico said. "There's no way of possible survival."
She said demolition of the home would begin early on Sunday.
"Our data has come back, and there is absolutely no way we can do any kind of recovery without endangering lives of workers," she said.
Jeff Bush's brother, 35-year-old Jeremy Bush, feared earlier on Saturday that his brother was lost forever. A small memorial of balloons and flowers for Jeff Bush had formed near the home on Saturday morning.
"I thank the Lord for not taking my daughter and the rest of my family," said Jeremy, who worked with his brother in landscaping.
'EVERYTHING WAS SINKING'
Jeremy himself was rescued from the sinkhole by the first responder to the emergency call, Douglas Duvall of the Hillsborough County Sheriff's Office. When Duvall entered Jeff Bush's bedroom, he saw a widening chasm but no sign of Jeff.
"The hole took the entire bedroom," said Duvall. "You could see the bed frame, the dresser, everything was sinking."
Norman Wicker, 48, the father of Jeremy's fiancÃ©e who also lived in the house, said "it sounded like a car ran into the back of the house."
Damico said the hole would be stabilized after the house is demolished to ensure the safety of the surrounding area. However, the residents of two neighbouring homes who were forced to evacuate are unlikely to return, she said.
Soil samples showed the sinkhole had compromised the ground beneath the homes, engineers and public safety officials said on Saturday.
The residents of those houses were allowed 20 to 30 minutes in their homes on Saturday to gather belongings. Fire-fighters and residents formed an assembly line to move items out of the houses and into SUVs and trucks.
"They'll most likely never be allowed back in their houses," Damico said.
Before demolishing the home where Jeff Bush lived, workers will try to move part of it to a safe space on the sidewalk to let family members retrieve some heirlooms and personal belongings on Sunday, she said.
The risk of sinkholes is common in Florida due to the state's porous geological bedrock, according to the Florida Department of Environmental Protection.
As rainwater filters down into the ground, it dissolves the rock, causing erosion that can lead to underground caverns, which cause sinkholes when they collapse.
(Additional reporting by Brendan O'Brien and Colleen Jenkins; Editing by Barbara Goldberg and Xavier Briand)
Copyright © 2013 Reuters
Posted: 02 Mar 2013 06:38 PM PST
YUANGUDUI, China (Reuters) - For Chen Qiuyang, the new Chinese leadership that formally takes over this month can radically improve her life by doing just one thing: providing running water in her village in a remote corner of the northwestern province of Gansu.
"We have to carry water from the well on our shoulders several times day. It's exhausting," Chen, who looked older than her 28 years, said in Yuangudui village, resting on a stool outside her home after completing another trip to the well.
Communist Party chief Xi Jinping takes over as China's new president during the annual meeting of parliament beginning on Tuesday and bridging the widening income gap in the vast nation is one of his foremost challenges.
Xi has effectively been running China since assuming leadership of the party and military - where real power lies - in November, and has already projected a more relaxed, softer image than his stern predecessor Hu Jintao.
But there will be pressure on him to tackle problems accumulated during Hu's era like inequality and pervasive corruption, which have given rise to often violent outbursts in the world's second-biggest economy, sending shivers through the party.
Outgoing Premier Wen Jiabao will likely address these issues in his last "state of the nation" report at the National People's Congress to nearly 3,000 delegates, whose ranks include CEOs, generals, political leaders and Tibetan monks - as well as some of China's richest businessmen.
China now has 317 billionaires, a fifth of the total number in the world, and is on track to overtake the United States as the largest luxury car market by 2016.
Yet the United Nations says 13 percent of China's 1.3 billion population, or about 170 million people, still live on less than $1.25 a day.
While parliament is a regimented show of unity that affirms rather than criticises policies, income redistribution is likely to be a hot topic, along with other issues like ministry restructuring, corruption and the environment.
In January, the State Council, or cabinet, issued a new fiscal framework designed to make rich individuals and state corporations contribute more to government coffers and strengthen a social security net for those at the bottom.
But tackling China's wealth gap will need more than just taxes. Analysts say state-owned enterprises will have to be privatised and the household registration, or hukou, system that prevents migrants from enjoying the benefits of urban citizens, will have to be dismantled.
"Fiscal reforms and changes to let private firms advance and the state retreat will decide whether this round of reforms can succeed," said Xia Bin, an economist at the cabinet think-tank Development Research Centre and a former central bank adviser.
"There is definitely no way out," he wrote in the latest edition of China Finance, a magazine published by the central bank.
Many groups have said they will make sure that message is heard at the parliament, even though the session typically acts more as a talking shop for decisions already made by the party rather than approving new laws. On its closing day it will formally vote in Xi as the new president and Li Keqiang as new premier.
A group of private businessmen will meet on the sidelines to push for privatisation of state firms, which they view as a "vital second round of reforms", according to a person knowledgeable about their plans.
A separate forum for private steel producers will air grievances about preferential loan access for state firms, even though the state firms were less profitable than their more flexible cousins in last year's volatile steel market.
The champions of the private sector argue that private firms generate nearly 60 percent of China's economic growth and 75 percent of jobs.
Favouring state firms that thrive on political connections rather than market discipline skews the economy, undermining future competitiveness, they say.
Some export-oriented companies have ceased manufacturing and are simply speculating in property or the grey finance market.
"Private firms are having a hard time," said Xu Qing, general manager of Zhongbohong Urban Development Co, a unit of privately owned property and investment firm Boao Hungkai Enterprise Group in Guangzhou.
"I believe top leaders have seen the problems and I'm cautiously optimistic about reforms."
Without reforms, China is at risk of falling into the "middle income trap" after three decades of breakneck growth, the World Bank warned last year.
Growth in the world's second-biggest economy slowed in 2012 to a 13-year low, albeit at a 7.8 percent rate that is the envy of other major economies.
The annual economic growth target is likely to be set at 7.5 percent for this year, the same as in 2012.
Many analysts believe China's growth will be nearer 5 percent than 10 percent by the end of this decade without reform, making it even harder to tackle the gap between the rich and the poor.
China's Gini co-efficient, a measure of social inequality, stands at 0.474 according to official estimates, well above the 0.4 level that analysts view as the point at which social tensions may come to a head.
A 0 score on the Gini scale denotes perfect equality and 1.0 complete inequality.
For now, such statistics are a long way from Yuangudui, where government support boils down to repaving rutted roads, building latrines and subsidising planting of potatoes, a cash crop.
But the villagers are fully conscious of the inequality plaguing China, even if some of them had never heard of Xi Jinping before he showed up last month on a visit.
Most young people have left for the provincial capital of Lanzhou, where they can make 1,000 yuan ($160) a month as construction workers, far more than the income from farming.
"The rich get richer while we in the village are getting poorer," said Guo Lianying, 32, holding out his hands to symbolise the growing gap.
"This is a problem the general secretary has to solve," he added, using Xi's formal title as Communist Party boss.
($1 = 6.2273 Chinese yuan)
(Writing and additional reporting by Kevin Yao and Lucy Hornby; Editing by Raju Gopalakrishnan)
Copyright © 2013 Reuters
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