Giveaway to Televisa could cost government Ps. 2 billion

Business columnist Alberto Aguilar provides more color on the pro-Televisa parts of the tax package in his El Universal column today:

It was a surprise that the Deputies supported an exemption from the payment of royalties for the companies that will participate in the radio frequency auctions expected to take place during the year. The draft bill has some unusual features, linked to the pressures that the large groups in this sector are exerting.

Cofetel [the Federal Communications Commission] … sought, for example, to restrict the 1700 Mhz packages to new players, among whom Televisa will certainly be one…. The CFC [Competition Commission] ruled to eliminate the exclusivity of one of the packages, which would also be capped at 30 Mhz [of bandwidth]. If Cofetel agrees, the terms of the call for bids will be published shortly.  But beyond this, as it happened, the Deputies approved an exemption for royalty payments for winners of the 1.7 and 2.1 GHz bands. In this exemption, Televisa will also be one of the big winners, since it will certainly participate… The exemption from the payment of royalties will cost the Ministry of Finance Ps. 2 billion….

What was approved was an amendment to section “E” of Article 244 of the Federal Royalties Law. During the debates, it was difficult to identify who was responsible for the proposal.

The proposal was almost at the point of being thrown out … until Deputy Alberto Cano Vélez (PRI) of the Finance Commission accepted responsibility. … It was said that the pressure was such that the PRI conditioned, together with the PAN, its approval of the other relevant points of the fiscal package on this. The subsidy for the participants in the frequency auction was also gallantly defended by Gerardo Flores of the Green Party, who in the past had ties with the Radio and TV Chamber. The amendment to the Royalties Law is now in the hands of the Senate, which will decide whether to approve or not this sacrifice in favor of an industry that has continued to grow, even during the crisis, and all based on the argument that this measure is needed to attract new foreign players.  While everything indicates that Mexicans will pay more taxes in 2010, the PRI and the PAN are working hard to sustain a country in which privilege still prevails.

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