Taxes on remittances in the US, another possible weapon against immigration and Latin America

Los Ángeles.- Los impuestos a remesas se perfilan como un arma más de los republicanos en EE.UU. contra los inmigrantes indocumentados con al menos dos proyectos de ley, que de aprobarse, según activistas consultados por EFE, impulsarían más la inmigración hacia el país y serían catastróficos para países latinoamericanos empobrecidos.

The proposal 'Great and Beautiful Bill', presented this week by Republicans for evaluation in the House of Representatives, includes a special 5% tax on remittances.

It is also expected to be debated in the House of Representatives the bill on 'Border Security Investment Law' which proposes a 37% charge on money transfers sent to the five countries whose citizens or nationals had the highest number of illegal entries into the United States.

"Instead of improving the landscape for undocumented immigration, these proposals will make it worse. These Republican lawmakers do not take into account the root of the problem, which in most cases is poverty," Juan José Gutiérrez, director of the Full Rights for Immigrants Coalition, told EFE.

The activist of Mexican origin indicates that the imposition of any of the taxes on remittances, even the 5%, will affect already impoverished regions throughout Latin America.

"This is going to have the opposite effect; if families no longer receive enough money to subsist, they will be forced to follow the path of their loved ones who already live in the United States," he emphasized.

The director of the Association of Salvadorans of Los Angeles (ASOSAL), Teresa Tejada, forecasts a "catastrophe" for the economies of Central American countries if any of these taxes are approved.

The family remittances from the diaspora of Central America in the U.S., from where more than 95% of the total comes, represent between 25% and 30% of the Gross Domestic Product (GDP) of Honduras, 20% of that of Guatemala, and 24% of El Salvador, according to the official data available.

Inspired by Trump

Both Republican proposals support the immigration policy of U.S. President Donald Trump, who has made combating undocumented immigration one of his priorities.

The 5% tax on shipments aims to finance the tax exemptions promised by the president and support border security initiatives.

This charge would apply to shipments made by undocumented immigrants, immigrants with permanent residency, work visas, or those covered by any immigration benefit. U.S. citizens would be exempt from the levy.

It is expected that the Legislative branch will give a quick passage to the 'Great and Beautiful Bill', and although it does not currently have the necessary votes to be approved, activists fear that the 5% tax on remittances may be maintained in an amended proposal that achieves the support of the majority.

Since his first term, Trump has supported the imposition of tariffs on remittances, which this year would help him balance the cuts promised in his re-election campaign.

"The approval of a small tax on remittances, even if it's only 5%, opens the door for this levy to increase even further," warns Gutiérrez, who hopes that the initiative to impose a 37% tax on remittances from the five countries with the most immigrants will not succeed.

However, Tejada points out proposals as radical as that of the Republican congressman for Florida Carlos Giménez, who recently requested the Secretary of the Treasury, Scott Bessent, to "eliminate" in its entirety remittances to Cuba, in this case, as punishment to the regime on the island.

You may be interested in: Trump suggests tax cuts for incomes under $200,000 annually

The Salvadoran activist, however, said that "the remittances that immigrants make are not for a government, whoever it may be, they are for the families who need that help. It does not depend on who is in power".

The discontent over the proposal to charge 5% on remittances reached Mexico, where President Claudia Sheinbaum described the measure as an "injustice", pointing out that immigrants already pay taxes.

"Let's see: how are they going to tax if Mexicans already pay taxes there (...) All Mexicans who live in the United States pay taxes, whether they have documents or not, they all pay taxes," affirmed the Mexican president. 

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