The tax burden grew from 13.4% in 2013 to 14% in 2016, both due to the delayed effect of the tax reforms in Honduras and Nicaragua, as well as better management on the part of tax entities in Guatemala and Panama.
From the Regional Economic Report (IER) 2016-2017: Opportunities and challenges for Central America, by the SIECA:
The amendment to the Tax Code, partially approved by Congress, omits the concept of "global income", and establishes "territorial income".
Latribuna.hn reports that "...The Bill for a new Tax Code was drafted by the government, employers and a sector in the social economy, and during the dissemination it was said that the change to "Territorial Income represents a setback in the fight against capital flight."
The ICEFI highlighted the achievement in reducing the fiscal deficit, but noted "weaknesses in access to information and opacity in the management of public resources."
From a statement issued by the ICEFI:
The Icefi is concerned about the tax changes in recent years because part of its impact is an increase in the regressivity of the tax system, less fiscal space for social spending, as well as a latent opacity in the discussion on the use of State property and new fiscal institutions.These negative effects detract from the achievements made in terms of macro-fiscal stability in the medium term, we warn, this will increase democratic ungovernability, public distrust and restrict the scope for sustainable, sustained and inclusive economic growth.
The countries facing the greatest risk of fiscal unsustainability within three years are El Salvador and Honduras, followed by Costa Rica and with less risk, Nicaragua and Panama.
From the "EconomicOutlook"section of the V Report on the State of the Region 2016:
A bill prepared by the Executive and the private sector includes the concept of a single tax and the creation of an administrative court for tax matters.
The bill must now be analyzed and approved by Congress. In addition to regulating exemptions, the new code creates theSuperintendency of Tax and Customsand the Tax Administration Department.
From 2014 to 2015 the size of central governments remained constant at an average 18.5% of gross domestic product (GDP).
From the introduction of the report: "Macrofiscal Profiles: 6th Edition" by the Central American Institute for Fiscal Studies (Icefi):
2015 proved to be a period of low tax advance for the Central American region. On average, the size of central governments remained constant compared to 2014, at 18.5% of gross domestic product (GDP). However, not all nations maintained this trend in the same way. While the governments of Nicaragua, Costa Rica and El Salvador, some of the largest fiscally in the region, continued to increase their participation in the economy, reporting increases of 1.5, 0.7 and 0.7% of GDP, respectively, the Government of Guatemala - one of the smallest in the world became even smaller, being reduced by 1.2% of GDP. For its part, the Government of Honduras reported a small decrease of 0.2% of GDP, fully converged with its policy of fiscal austerity, while that of Panama had a transient contraction of 1.4%, reflecting a reorganization established by the new administration and that, according to the plans for 2016, will be reversed in full.
While the Northern Triangle countries strive to reduce or at least maintain constant levels of debt / GDP, Costa Rica and Panama move further away from fiscal discipline, the former at the greatest pace.
From the introduction of a report entitled "Macrofiscal Profiles : 4th Edition." by the Central American Institute for Fiscal Studies (Icefi):
One focuses on banking, with consequences on bank confidentiality and has drawn criticism from various sectors.
Latribuna.hn published, "the former head of the National Commission of Banking and Insurance (CNBS), Gustavo Alfaro, said yesterday that there is confusion regarding the two projects related to fight against tax evasion one submitted by liberal Congressman Jose Simon Azcona Bocock and the other by Deputy Minister of Finance (MOF), Carlos Borja."
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