If passed the new reform would create taxes for financial transactions, unproductive properties and newspapers.
Elsalvador.com reports that Carlos Caceres, head of the Ministry of Finance stated that "The President (of the Republic) has instructed the Ministry to evaluate a proposal acceptable to him and to society, that is politically acceptable and not damaging to the productive sectors and to the poorest people. "
The head of the ministry of Finance confirmed that there are still more than $30 million worth of outstanding income tax returns for the fiscal year 2011.
Carlos Caceres, the Finance Minister said that it is expected that this month refunds of amounts less than $500 will be made, which amounts to around $15 million.
"In mid-April, the Foreign Office minister said in May payments would be made representing the delivery of funds to Salvadorans with a return less than $200 who had filed their returns in January and February. Taxpayers, via social networks on elsalvador.com, criticized the default", published Elsalvador.com
Officials at the Ministry of Finance and Customs have kept customs offices at a standstill for the third day running.
Business groups are concerned about the extent of the emergency measure which has generated large economic losses for businesses.
Laprensagrafica.com reports, "At the customs border posts of El Poy, El Amatillo, The Chinamas and The Hachadura, staff of the National Civil Police (PNC) was deployed during the morning to streamline administrative processes and prevent transit through them being further affected.
Goods vehicles can not pass through customs posts at the Salvadoran border, where Treasury officials are on strike.
Various business groups have expressed concern about the strike, which is causing serious economic losses for businesses.
Regarding this, the Chamber of Commerce and Industry in El Salvador states that "We have learned from our partners that the suspension of customs duties has already begun to generate losses of perishable products, delays in delivery times and possible shortages of basic goods, especially vegetables from other countries in the region and those that supply El Salvador. "
Such was the Salvadoran businessmen's response to a proposal by President Funes to create jobs for gang members.
Employers are willing to contribute to the safety of El Salvador, but the president of the Salvadoran Association of Industries (ASI), Javier Siman said it was "ironic that we are giving priority for jobs to gang members."
The idea of offering jobs to young Salvadorans, including gang members who want to start a different life – as a solution to the problem of gangs - was presented at a meeting by the President, Mauricio Funes, said business associations this week.
A new reform is being prepared containing the rules governing the activities of Pension Fund Administrators, seeking to improve the profitability of the contributions for all contributors.
The Salvadoran government is preparing a second reform of the law on Pension Fund Administrators (AFP), and other possible changes.
According to the Executive’s idea, AFP’s would be allowed to invest contributors funds in foreign securities, which should lead to improved profitability of pension money and more resources to grant retirees a better pension, explained the minister of Finance, Carlos Caceres.
Over $350 million has been spent this year that was not included in the initial budget.
Increased costs and reduced government revenues have resulted in a delicate financial situation, which is embodied by a growing fiscal deficit.
This situation has led the Ministry of Finance to recognize that there is $350 million that was spent this year on subsidies such as gas and electricity, which were not budgeted for and for which no resources are available.
The National General Budget for 2012 will be close to $4,400 million, similar to that of 2011.
Finance Minister Carlos Caceres said the figure is practically the same as that of 2011, with the difference that the 2012 budget does not include payments for Eurobonds, which in 2011 meant $650 million.
"Cáceres insisted on calling for 'austerity' from the other organs of state, because the country's economic conditions are not ideal.
The government estimates spending $426 million in grants this year.
Expenditures made by the government by way of state subsidies, such as transfers to energy consumers using less than 99 kilowatt hours per month, are complicating the state of public finances.
While in 2010 $371 million was spent in grants, in 2011 the government estimates that this figure will increase to $55 million.
The fund, which now totals $8 million, will be used to renovate coffee plantations.
Replanting and enhancing the development of the coffee sector, which in recent years has fallen behind due to lack of investment, are the main objectives of the coffee trust which is now ready to receive the first resources and start operations.
An article by Keny López in Laprensagrafica.com states, "according to Carlos Caceres, The Minister of Finance, the fund has over $ 8 million and this money will be used for the renovation of coffee plantations. "We are in time (for planting coffee trees). The Minister of Agriculture will issue protocols for seed control and I'm sure we will rescue the majority of old coffee trees in poor condition, to regain an adequate production, " he said. According to Cácere’s calculations, they expect to have performed a complete renovation of coffee plantations in the country in five years .
The government admitted working on a new tax reform to broaden the income tax and create new taxes.
With regards to new property tax, Finance Minister Carlos Caceres said it would be applied for the 2012 and 2013 fiscal year.
"On tax reform as a whole, the finance minister said they are still working on it, but there isn't anything formal, in any case he indicated that it could jump-start in the first half of this year," noted Elsalvador.com.
The country signed a financial cooperation agreement with the European Union and will serve to implement improvements in fiscal policies.
This agreement will offer some of the resources needed to finance public investment and the implementation of development policies, both economic and social.
This agreement will run through the Program of Support for Economic Recovery (PARE-ES), by which the European Union will deliver over a period of 3 years the sum of $ 31.7 million, to capitalize directly the country´s National Treasury Account.
BCIE and IDB funds will finance the "Casa para Todos" (Housing for Everyone) program.
The $ 70 million Inter-American Development Bank loan will go to build 6.373 homes for low-income families, of which 2.000 would be ready by March 2011.
The credit of the Central American Bank for Economic Integration (BCIE), of also $ 70 million, "will be implemented by the National Housing Fund (FONAVIPO), which will bid the affordable housing projects to developers," Elsalvador.com reported.
Total 2011 budget is $ 4,503.5 million which includes payment of $653.5 million in Eurobonds due in 2011.
Fiscal policy objectives set for fiscal year 2011 are as follows:
Increasing tax revenues by raising tax burden from 14.0% to 14.7% of GDP in 2011, implementing measures aimed at strengthening legal frameworks and the efficiency of the tax system in order to combat tax evasion and smuggling.