MEXICO CITY – The Mexican Senate approved – with minor modifications – the revenue portion of the 2010 budget bill earlier passed by the lower house, a partial victory for President Felipe Calderon in his efforts to offset a decline in oil revenues.

The senators, in a session that lasted until the wee hours of Saturday, approved an increase in the income tax for Mexico’s highest earners from 28 percent to 30 percent and also agreed to raise the value-added tax rate from 15 percent to 16 percent

They also supported a measure passed by the lower house to raise taxes on alcohol, tobacco and gambling and added a new 3 percent levy on telecommunications services, excluding the Internet.

The VAT increase was one of the most contentious aspects of the legislation. The main opposition Institutional Revolutionary Party, or PRI, abstained from the vote and leftist parties rejected that portion of the budget bill, saying that it would unfairly punish the majority of the Mexican population, 50 percent of whom live in poverty.

Calderon’s PAN party, which lacks a majority in either the lower house or Senate, was unable to get Congress to approve a new 2 percent tax on all goods, including currently exempt food and medicine.

The senators also voted for a measure excluding low-income earners – those making 12,300 pesos ($930) a month or less – from having to pay income tax and approved a 3 percent tax on cash deposits of at least 15,000 pesos ($1,153). Previously, cash deposits of 25,000 pesos or more were taxed at a rate of 2 percent.

In addition, the senators approved a change to the fiscal consolidation regime that would give companies a maximum of five years to pay deferred taxes.

The conservative Calderon this week sparred with business leaders, accusing them of demanding cuts in government spending and taxes on the poor, yet “when looking at their numbers, they’ve paid on average 1.7 percent in taxes for several years. That can no longer be.”

A leading business federation responded by criticizing the government’s fiscal proposals in a statement, calling them “ill-conceived, ill-founded and retroactive,” and said the private sector is helping the economy by “investing and creating jobs.”

The bill passed by the Senate will now return to the lower house for its final approval before it goes to Calderon’s desk.

The lower house must approve the spending portion of the budget by Nov. 15.

The tax hikes are intended to cover a 300-billion-peso ($23.08 billion) revenue shortfall caused by a recession-induced drop in tax collection and a sharp decline in oil revenue, which finances 30 percent of the national budget.

The budget the Calderon government submitted to Congress also calls for more than $16 billion in spending cuts, an attempt to tackle a growing budget deficit amid the country’s worst recession in decades.

Mexico, which has been hammered by a drop in exports to the United States and a worrying decline in oil production and oil-export revenues, is trying to retain the investment-grade credit rating it has enjoyed throughout this decade.