Why are the Elite are Interested in Fiscal Policy?

Analysis of the evolution of fiscal policy in the isthmus, as a reflection of the reconfiguration and influence of the economic elite in the region.

Friday, June 14, 2013

The report "Fiscal policy, elite groups and the state in contemporary Central America" by the Central Institute for Fiscal Studies (Icefi), "recognizes how powerful the present elite groups are and how much influence they have in each of the countries. In that sense, it has been said that the elite groups are still powerful, but they are no longer hegemonic, as in the case of Guatemala and El Salvador. There are emerging powers that defy the power of traditional elite groups and with whom the latter must share their power, and certainly there are some spaces that have been won, for the good of the public, by actors from the public arena who try to respect the rule of law. "

The report notes that the first theme around which the relationship between fiscal and political elites focusses is, logically, payment of taxes.

This issue "makes up the space in the main relationship between economic powers and the Central American states. It is in this arena that the power structure is defined. The study allows us to confirm that economic elites in Central America continue to have a medieval view of taxes and that it is proximity to the king, that is to say the ruling party, determines whether or not taxes are paid and how much taxes we pay. Taxes under this view, are more of a punishment than a commitment to the construction of what belongs to everyone. "

"... PUBLIC SPENDING makes up the second element of why the elites are concerned with fiscal policy. "

"... The third element is PUBLIC CREDIT, of vital interest to the financial sector in each country. "

"... The fourth element is FISCAL TRANSPARENCY. Clearly corruption has two partners, the government and the private sector. Both act in their spheres of activity to hinder fiscal transparency processes. "

More on this topic

Central America: Fiscal Outlook - April 2017

May 2017

In 2016, the ratio between total expenditure of central governments of the countries of the region and GDP remained almost unchanged from the previous year, going from 18.3% to 18.6%.

From the report "Macroeconomic Profiles: 8th edition", from the Central American Institute of Fiscal Studies (Icefi): 

OECD Insists on Shareholders Registry

February 2016

The organization has once again supported the initiative that the Costa Rican government has control over the register of shareholders of companies classified as large taxpayers.

"The state must have in its hands information on the shareholders of companies and where dividends go to.

Tax Amnesties are Bad

June 2013

They undermine the principle of tax justice and the morality of honest taxpayers, hindering equal competition and promoting impunity.

From a statement by the ICEFI:

Guatemala, June 14, 2013

- The approved decree contains a greater amount of tax amnesty, in which benefits are given to delinquent taxpayers and those who have operated at unfair advantage over those who pay their taxes correctly and on time, even aggravating the negative consequences of the tax amnesty applied in 2011. This action violates the principle of tax justice and the morality of honest taxpayers, constituting an obstacle to a desirable climate of competition on equal terms, clear rules and ones which combat impunity.

Guatemala: World Bank Approves USD 350 Million Loan

July 2009

The World Bank Board of Directors approved a USD 350 million Development Policy Loan (DPL) for the government of Guatemala.

With the objective of continuing to support the country’s efforts to improve its fiscal and institutional policies and mitigate the impact of this global crisis.

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