Honduras Backs Down on Security Tax

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The Honduran Congress softened new taxes intended to fund the fight against soaring violence and organized crime in the country, amid protests from business groups.

The taxes were levied under an act passed in June. Then-Security Minister Oscar Alvarez called on the private sector to back the move, arguing that they would benefit in the long term, as the taxes would help to create a more secure business environment, while reducing the need for companies to pay for private security.

However, private sector leaders complained about the lack of transparency in collecting and spending the tax and argued that the measures would discouraging business in Honduras.

Congress has now reined in the move, cutting taxes on mining exports and reducing the total projected sum to be raised. The reformed measure now has the backing of the business sector.

Congress President Juan Orlando Hernandez talked of his hope that move would encourage business, helping the government to raise significant funds to fight organized crime in the country, as drug traffickers move into the Central American nation and crime levels rise.

Orlando Hernandez described the current security situation in the country as “unbearable,” as the country’s murder rate looks set to rise to a record 86 per 100,000 inhabitants in 2011, one of the highest in the world.

As InSight Crime has noted, countries throughout Central America are grappling with the idea of imposing special taxes to pay for security, something the U.S. is encouraging. The region has one of the lowest tax burdens in the world, and is struggling to pay for measures, such as improved police forces, to combat organized crime.

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