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Mexico lawmakers to seek higher top tax rate in gov't overhaul

By Miguel Gutierrez and Alexandra Alper

MEXICO CITY, Oct 16 (Reuters) - Lawmakers in Mexico's Lower House will propose changes on Wednesday to a tax overhaul plan that President Enrique Pena Nieto hopes will boost the country's low tax receipts, and urge higher rates for top earners than previously planned, officials said.

Pena Nieto last month proposed a series of measures to raise Mexico's anemic tax revenues by about $35 billion by 2018, but he is now grappling with stiff political opposition and lobbying from business groups.

He floated the idea of raising income taxes for wealthier Mexicans and slapping a levy on stock market gains, a universal pension and unemployment insurance, along with emergency spending that would force a budget deficit this year and next.

The fiscal reform proposal is a key plank of a wider reform agenda that Pena Nieto hopes will boost growth in Latin America's No.2 economy, and also includes measures to tax soft drinks and impose a carbon charge on polluters.

For their part, lawmakers will propose higher top rates of income tax for the wealthy on a sliding scale beyond the 32 percent top rate that Pena Nieto had put forward, lawmakers and officials told Reuters on condition of anonymity.

Ruling Institutional Revolutionary Party (PRI) officials have previously said the government was willing to pull back proposed unpopular levies on private schooling and mortgages.

The Lower House must approve the bill by Sunday. It must then pass through the Senate.

Pena Nieto attached the reform to the 2014 budget, which must be approved by mid-November, and the PRI needs to cut a deal to pass the bill because it does not have a majority in Congress.

Many economists and investors were disappointed that Pena Nieto did not seek a more comprehensive tax overhaul, and they warned that rising social security and pension costs would require further tax reform in the coming years.

He steered away from imposing a controversial sales tax on food and medicine as Mexico's economy slows and as he saves capital to push through a key overhaul of the energy sector.

"The government defiantly faces challenges in the medium term," said Marco Oviedo, an economist at Barclay's Capital in Mexico City.

"The topic of public finances will remain pending, and they will have to address it later in Pena Nieto's term, or in the next administration."

If the efforts to push the fiscal reform plan through founder, it will curb the government's spending plans and could complicate other legislation, including a bill to open the country's state-run oil industry to private investment.