Private business leaders spoke out against the creation of new taxes and increasing income tax.
"The private sector struggles between uncertainty and anger, after a study by Eurasia ensures that the Salvadoran Government is expected to approve an increase to the ceiling of income tax, a new estate tribute and a security levy," Laprensagrafica.com reports.
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.
Fitch suggests an increase in tax burden in order to improve government spending and thus achieve higher social spending.
This will improve the country´s risk ratings and thus attract investment, said Erick Campos, Executive Director of Fitch.
Sigloxxi.com includes statements from the executive, "Guatemala has maintained a record of good macroeconomic management, which has allowed it to have good credit ratings, but cannot advance any further because social conditions are not the best, so to progress, the State must increase social spending and therefore needs more revenue. "
The project includes sharp increases in consumption taxes and cutting public spending.
The government plans to introduce the fiscal adjustment plan to the National Assembly over the course of the week.
"The adjustment plan, though the term has been carefully avoided by the president Laura Chinchilla, has as focal point an increase in Sales Tax from 13 to 15%, extending it to services such as private health and education as wells as reducing exempted goods from 300 to only 50," reports an article in AFP.
Holcim will have to pay a 5% tax in favor of the municipality of Metapán for each bag of cement produced.
The law decree states that each 94.5 pounds of cement produced will have a 5% tax on the selling price and the amount will be paid to the municipality of Metapan. Likewise, a 5% tax on the sales price will also be applied to production of cement powder known as clinker.
More government spending -> more debt -> more expensive credit and more taxes. The State continues to fatten at the expense of the productive sector.
Juan Carlos Hidalgo, in his blog at Elfinanciero.com, begins his article calling the 2011 budget approved by the Legislative Assembly as “illegal”. He explains that current expenditures are included as investments, which is specifically prohibited by the National Budget Law.
The Finance Ministry is discussing a tax on large capitals to fund security expenses.
At the request of President Mauricio Funes, the Ministry of Finance examines the implementation of a equity tax in order to finance spending on public safety.
La Prensa Gráfica on its website reported statements from President Mauricio Funes, on the subject, "It is a equity tax to fund security costs." ¿And where did the idea come from? From my meeting with President (Alvaro) Uribe, in Colombia."
98.28% of surveyed businessmen opposed increased taxes and a potential tax reform.
The survey was conducted by the Chamber of Commerce of Guatemala, and included managers and business owners of the agricultural, commercial, industrial and service sectors.
"Jorge Briz, president of the Chamber of Commerce, said that tax reform would work if taxes were for all taxpayers, including the informal sector'," says the article on El Periódico´s website.
In the first eight months of 2010 the deficit totaled $997 million, 70% more than the same period of 2009, as a result of stagnant revenue and increased spending.
State revenues are still below 2008 levels, and spending has increased considerably, mainly in salaries, social programs and pensions.
Between January and August 2010, revenues summed $3.35 billion while expenses $4.3 billion, mostly in salaries, social programs, pensions, scholarships, the special fund for tertiary education, road repairs and municipalities.
If the bill presented to the Legislative Assembly is successful, a 15% tax will be levied on casinos' gross earning.
The previous government's proposal also includes an annual charge of $50,000 payable by electronic betting houses located in the Costa Rican national territory.
"It also seeks to charge both sectors a 0.5% annual payment for operating in the country.
The country's macroeconomic strength contrasts with its credit weakness and low tax base, which Fitch Ratings believe keep its ratings below investment grade.
Fitch Ratings recently affirmed Guatemala's local and foreign currency Issuer Default Ratings as BB+. The main positive factors contributing to this risk evaluation are its history of macroeconomic stability and debt repayment combined with low debt burden.
The business sector will present proposals to solve the fiscal deficit, which may also be the foundation of a social pact.
17 proposals will be presented, aimed at two large areas: reducing spending and increasing revenue.
Jorge Daboub, president of the Salvadoran Chamber of Commerce and Industry, explained: “We understand that the country has a serious fiscal problem, the deficit has worsened due to the country’s negative economic situation.
For the next three years buses can be imported without paying tariffs, as a new bill came into force on Monday.
Called “Bill for Strengthening and Improving Public Transportation”, it allows mass transit association to import buses to replaces existing ones without paying imports tariffs and value-added taxes.
“In addition to waiving taxes for imported vehicles, it also removes levies on prepaid systems, fleet management tools, bus information services, GPS devices and digital recording equipment. Station technology will receive the same benefits but just for two years”.
Finance Minister Fernando Herrero said that "our efforts should be focused on increasing tax income through administrative and legislative measures".
Herrero is working on a tax reform bill, which aims to unify previous projects into one update. Now, through a press release, the minister announced administrative measures: "a renewed effort in collecting the tax delinquent portfolio (which amounts to more than $ 13 million), a more intense audit of high-risk groups from an evasion point of view (liberal professionals, medium-commerce), informal businesses and combating smuggling. "
There ain't no such thing as a free lunch. Whatever money Guatemalans save from their electricity bills thanks to a recently introduced energy subsidy, they’ll pay it through taxes.
Authorities frequently engage in reality-denial exercises, which is obvious as they don’t want to pay the political costs of taking unpopular decisions.
In real economy terms, it was unavoidable that Guatemalans would have to pay more for the energy they consume.