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Remittance worries

Tuesday, January 31, 2017


The economies of El Salvador, Guatemala and Honduras would be seriously affected, if remittances sent to families at home by workers in the United States were taxed.

Mexico would be affected also, since remittances last year amounted to 2.5% of the value of national production.

On the other hand, remittances account for more than 15% of GDP in El Salvador and Honduras, and more than 10% in Guatemala.

It is unclear whether or not the new United States administration in fact ends up taxing remittances, and if so, whether or not the tax plan would affect only Mexico, as part of an effort to make Mexicans finance a border wall.

On the other hand, remittances to Central America would decline, if some of the senders are undocumented migrants, who are deported as a result of stricter controls on foreign workers.

Any reduction in national revenue could exacerbate social conditions in El Salvador, Guatemala and Honduras, where poverty is a major factor in perpetuating a culture of violence.

With homicide rates of 85 and 64 per 100,000 inhabitants in 2014, according to the United Nations, El Salvador and Honduras respectively are the most violent countries in the world,.

Guatemala is tenth, with 35 homicides per 100,000 people.

All three countries are in the bottom third of international rankings, in terms of income per person.