After the announcement of the intention to increase the tax on the distribution of cement and fuel in Guatemala, businessmen believe that in this scenario of incipient economic recovery it is not a good idea to increase the tax burden.
In order to face the effects of the economic crisis generated by the covid-19 outbreak, Guatemalan authorities are already beginning to discuss the fiscal policy to be applied in 2021.
In this scenario of economic crisis, falling tax revenues and the need to finance recovery programs, in Guatemala and Costa Rica it is already proposed to increase current taxes and create new ones.
Guatemalan authorities are already beginning to discuss the fiscal policy they will apply in 2021, when the economy will have to face the effects of the economic crisis generated by the covid-19 outbreak.
"Of the total potential tax collection from VAT, only 50% is charged, with 19% being lost from exemptions and tax schemes, many without justification, while the remaining 30% is lost through evasion charges."
The president of the Bank of Guatemala has stated that in order to sustain the fiscal debt, the tax burden in the Guatemalan economy will have to rise from 11% today to 14%.
An article on Lahora.com.gt reports that, Edgar Barquín president of the Bank of Guatemala, said "... in order to maintain economic stability and ensure social spending for the benefit of the population, the level of taxes needs to rise to 14 percent of GDP this year. According to the official, rating agencies consistently report that one of the weaknesses in Guatemala, in financial terms, is the low level of taxes."
Extraordinary measures announced by the tax authorities will focus on reviewing withholding tax, declarations and verification of income tax.
Verification of statements of withholding agents, recalculation of retention for taxpayers with incomes over $3.886, monitoring omissions and frequent verification of cases of taxpayers of the higher tax interest, are part of the measures to be applied to the deficit of $87 million resulting from the last collection period.
An initiative presented by the Unidad Nacional de la Esperanza (UNE) has technical consensus from the Superintendency of Banks and Tax Administration, the Banguat and the Ministry of Finance.
Deputy Carlos Barreda, a member of UNE, said that if it is not approved, tax revenue losses could reach about $38 million.
The government asked Congress to increase public debt by $225 million to finance the budget.
Currently, the Executive Branch may issue up to $171 million. If the increase is approved, the number would reach $394 million.
The measure is due to the expectation of an "unprecedented reduction in revenue, up to Q4 billion ($494 million,) due to the global economic crisis," said Juan Alberto Fuentes Knight, Minister of Finance, in an article in sigloxxi.com
The SAT lowered its tax collection goal for 2009 by $441.
For 2009, the Tax Administration Superintendent (SAT) in Guatemala had planned to raise $4.758 billion, but it reported yesterday that the target was adjusted to $4.32 billion, a decrease of 9.28%.
Prensalibre.com reported that the Finance Minister, Juan Alberto Fuentes Knight, addressed the impact on the fiscal deficit: "It would have to be covered by a decrease in operating expenses, plus donations and debt grants pending approval, but it is expected that the aforementioned deficit will remain at 2%."
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