El Salvador Debates Security Tax for Cell Phones

SHARETweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+

Several proposals meant to raise money for El Salvador’s security initiatives — including a so-called cell phone “tax” — have generated significant controversy. This suggests that as bad as things may be in El Salvador, the situation hasn’t yet reached a point where elites are willing to come together for the sake of raising security funds. 

In recent weeks, there has been heated discussion in El Salvador over a government proposal that citizens pay a “special contribution” of 10 percent of their monthly cell phone and cable bill. Those who buy electronic devices like tablets or cell phone gear may also have to pay 10 percent extra.

The proposal is meant to finance Secure El Salvador, a recently-launched security initiative anticipated to cost $2 billion over the next five years.

Leaders of ruling party the Farabundo Marti National Liberation Front (FMLN) have come out in support of the initiative. President Salvador Sanchez Ceren said insecurity in the country requires an extraordinary budget, and that everyone needs to contribute.

Rival party the Nationalist Republican Alliance (ARENA) has opposed the proposed tax, questioning whether the government is capable of implementing security reforms, even if they manage to raise the money. 

El Salvador’s National Association of Private Business (ANEP) has also been critical, suggesting instead that the Presidency cut spending and put the savings towards funding security.

Other proposals include a tax on casinos, telephone companies (not users), or those earning $500,000 or more, as well as selling government bonds and reducing salaries of public officials.

InSight Crime Analysis

El Salvador is in dire need of cash for Secure El Salvador. Thanks to the breakdown of the truce between street gangs the Barrio 18 and MS13, the country is on track towards registering the world’s highest homicide rate by the end of the year.

SEE ALSO: El Salvador News and Profiles

Yet it also appears recent fund-raising proposals will be a tough sell to the Salvadoran public. The business community and ARENA are unlikely to budge on this issue, and a telecommunications tax may also prove unpopular among among ordinary Salvadorans — many of whom live off meager incomes and do not want an added expense.

Overall, this back-and-forth over how to fund Secure El Salvador suggests that the country’s elites and powerbrokers do not yet feel enough pressure to compromise on a solution. In contrast, in order to raise money for Colombia’s fight against the Revolutionary Armed Forces of Colombia (FARC) guerrillas, former Colombian President Alvaro Uribe successfully instituted a wealth tax. At the time, the FARC were at their most powerful, and were threatening the very existence of the Colombian state.

It seems that Salvadorans do not yet feel they are in a similar position, and do not perceive rising violence and gang activity as posing an existential threat to their livelihood. As a result, they may be correspondingly less willing to be subjected to increased taxation for security purposes.

SHARETweet about this on TwitterShare on FacebookShare on LinkedInShare on Google+