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Mexican maquiladora industry cries foul over taxes

Mark Stevenson, Associated Press

MEXICO CITY (AP) -- Mexico's Senate is debating President Enrique Pena Nieto's proposed tax reform, a measure that business leaders warn could threaten border assembly plants known as maquiladoras.

Maquiladoras have long received tax breaks that would be curtailed under the proposed tax changes. The plants are the lifeblood of border cities such as Ciudad Juarez, which are just recovering from a three-year wave of brutal drug-gang killings.

The changes that won initial approval in a Senate committee Tuesday include increased taxes on mining companies, soft-drink bottlers and high-wage earners.

Mexico currently has a low tax collection rate of only about 19 percent of GDP, far less than the average of 34 percent among developed countries. Congress' lower house has already passed the proposed changes.