Oct. 29 (Bloomberg) -- Mexico’s Congress should cut costs instead of considering a tax increase that would hurt the poor, billionaire Ricardo Salinas said.

A reduction in expenses of 8 percent would produce enough funds to aid poor Mexicans, Salinas told reporters today in Mexico City. Salinas controls retail and financial services firm Grupo Elektra SA, broadcaster TV Azteca SA and wireless carrier Grupo Iusacell SA.

The lower house of Congress approved a budget package earlier this month that includes raising the sales tax next year to 16 percent from 15 percent and increasing the corporate income tax to 30 percent from 28 percent. The lower house also approved a 3 percent tax on telecommunications. The Senate is now evaluating the budget.

“The government spends a lot and spends badly,” Salinas said.

He also criticized a measure approved by the lower house that relates to a planned airwaves auction. It would allow auction participants to postpone annual fees for the rights to the spectrum for two years if they are new to the mobile-phone industry. The measure should apply to all participants, not just new companies, Salinas said. The rules may make the airwaves too expensive, which would lead to higher prices for wireless service, he said.

Elektra gained 15.67 pesos, or 3 percent, to 537.48 pesos at 5 p.m. New York time in Mexico City trading. TV Azteca rose 3 centavos to 6.92 pesos, and Iusacell rose 15 centavos to 46.45 pesos.

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

Last Updated: October 29, 2009 17:21 EDT