Mexico's structural problems persist.(Brief article)

A June 2007 issues brief by the Center for Strategic and International Studies (CSIS) says that a recent public opinion poll concluded that the number one problem on the minds of Mexican citizens is personal safety. Mexicans are worried about the inability of the government to control the, "drug wars, murders, kidnappings, and muggings."

In spite of the fact that the new Mexican President's poll ratings are high-65 percent approval-a CSIS analyst on a recent visit to Mexico found a sense of helplessness among interviewees. The analyst wrote, "There is a disconnect between favorable assessments of Mexico by Wall Street and the pessimistic reactions on the streets of the country."

Tax collection problems loom large in Mexico's inability to govern effectively. Tax collections are low, says CSIS, even by Latin American standards. The roots of the difficulty are tax evasion and tax avoidance.

A June 20, 2007 story distributed from Mexico City on the Dow Jones newswires said that on that day the new Mexican President submitted a bill to Congress to reform the country's tax program. In a sign that the international investment community expected more from the tax proposal, the Mexican peso weakened against the dollar. A currency broker quoted in the Dow Jones report said, "The fiscal reform proposal didn't live up to expectations."

Meanwhile, CSIS implies that the Mexican government does not have the political will to deal with tax breaks given to special interests. CSIS also says that Mexico's labor situation-similar to that in places in Europe-makes it difficult for companies to fire people. And thus job creation is encumbered.

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