http://www.eluniversal.com.mx/miami/12401.html

Fox plan will target informal economy

Bringing informal workers into the formal economy would reduce strain on Pemex.

BY JOSÉ LUIS RUIZ/EL UNIVERSAL
El Universal
October 21, 2005

President Vicente Fox said on Thursday he will present a plan in the coming months to try and integrate informal workers into the formal economy.
During a meeting with business leaders in the capital, Fox said expanding the formal economy is urgent. He said the plan would be presented by this December.

In past months, Fox's head of public policies, Eduardo Sojo, has given basic information about what the plan will include.

According to Sojo, the government will try to entice informal workers into paying taxes and declaring their income by offering housing credits, health insurance, education scholarships and retirement plans in return.

The informal economy is a major headache for the federal government. According to the nation's Statistics, Geography and Information Institute (INEGI), more than 11 million Mexicans work in the informal economy, which is 28 percent of the working population.

These workers are not taxed, and therefore contribute to the government's chronic low levels of tax revenue, forcing it to rely on income from Pemex, the statecontrolled oil giant. Pemex's heavy tax load, however, has deprived it of much-needed funding for maintenance and exploration.

According to the Mexico City Chamber of Commerce, Services and Tourism, the nation is losing out on 50 billion pesos (US4.6 billion) of annual tax revenue.

Recent studies also indicate the nation's informal economy is growing at a more rapid pace than the formal economy.