The Debate over Tax Reform in El Salvador

Street vendor in El Salvador (Wikimedia Commons)O

Economists, opposition lawmakers and San Salvador's conservative conservative daily El Diario de Hoy have expressed strong objections to the new tax reform approved in El Salvador this summer.

A central goal of the the reform promoted by Salvadoran President Salvador Sánchez Cerén is to increase taxes on the wealthier contributors to provide the government with new revenues to boost expenditures on social services, education and community facilities. Th reform is is projected to raise the government an additional US$160 million annually. Read more from Benjamin Witte-Lebhar in this week's issue of NotiCen. (This move to boost taxes on wealthier contributors to allow the government to boost spending on social programs is strikingly similar to the argument that Mexican President Enrique Pena Nieto made when pushing his tax-reform plan in Mexico at the end of 2013).

Critics contend the tax hike will not only affect the wealthier taxpayers and the larger businesses, but small and medium-sized ones as well, and will effectually diminish their ability to grow and hire more workers. This, in turn, would create a negative ‘trickle-down’ effect that will hit even the poorest sectors of the economy. El Diario de Hoy, for example, argues in an editorial that that the pupuseras who sell stuffed tortillas on street corners and the minuteros (who peddle cell phone minutes) on the streets as well as the small store owners would be the ones paying for the nation’s new tax plan. The bottom line, says the editorial, is that  that, despite the popular belief that this tax reform was created so “those who earn the most will pay the most," the new system will have an effect on everyone, not just the wealthy elite.

Palacio Nacional, San Salvador

This argument is a classic and well-worn debate over the benefits of supply-side economics, and has served as a fundamental roadblock to socialist reform throughout Latin America, and elsewhere, for decades. President Sánchez Cerén, in contrast, refers to these opposing opinions as untruthful tactics to rally the public against the reform. 

There is also a debate about managing the economy in Panama, where conservative president Juan Carlos Varela is facing criticism from other conservative politicians for pushing through a measure to control food prices. Despite an inflation crisis that has driven the price of basic foodstuffs up more than 30%, members of the Cambio Democrático (former President Ricardo Martinelli's party) have hesitated to support the measure, citing possible side effects that include food shortages, black markets and even rioting and destruction of property. Read more from Louisa Reynolds in this week's edition of NotiCen.

  -Jake Sandler 

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Changes to Ecuador's Constitution: The administration of President Rafael Correa is calling for a series of constitutional reforms based on the argument that the Ecuadoran Constitution—which has been hailed by many for its strong emphasis on human rights and was developed in a constituent assembly and approved by a large majority in a national referendum—is preventing the government from ruling and thus jeopardizes the welfare of the people. Part of the problem, according to the administration, is that constitutional guarantees designed to protect citizens' rights are being used abusively to boycott government plans.  Luis Ángel Saavedra tells us more in this week's edition of NotiSur

A Third Term for President Evo Morales in Bolivia?: For the first time in more than a century, Bolivians are expected to elect a president for the third-consecutive time; indications are that Evo Morales will be re-elected for a term that would keep him in office until 2019 Morales takes credit for important achievements during his eight years as the country’s leader, and his achievements have been recognized by international organizations and even some of his domestic enemies. Meanwhile, his opposition—mainly right-wing and ultraright groups—has failed to build either strong leaders or a united program.  Read more from Andrés Gaudín in this week's edition of NotiSur.

Mexican Union Leader Wins Court Victory:Less than a month after Interpol issued an order for his arrest, exiled Mexican labor leader Napoleón Gómez Urrutia won a victory in the Mexican courts that effectively negates the directive of the international law-enforcement agency .This week's edition of SourceMex expands on this development.

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Colombian Peace Process Feels Different

Photo from Caguan Peace Talks,  Wikimedia Commons

"Members of the security forces and their families have been given equal footing alongside members of the guerrilla and their families [in cases where] both groups suffered harm or had their rights substantially impaired as a consequence of gross human rights violations." - Committee that selected victims to testify at Havana Peace Talks

The Colombian government and the Fuerzas Armadas Revolucionarias de Colombia (FARC) appear closer than ever to a peace agreement after 50 years of conflict. The ongoing talks, which have taken place in Havana, could lead to substantive change. According to the British non-governmental organization Justice for Colombia, several earlier attempts to achieve peace have failed, including the Caguan Peace Talks in 1998-2002. 

What is difference this time around? The Colombian government has made a concerted effort to enter this round of talks, the first after many violent years, with a tone of mutual respect, rather than one of superiority. Colombian President Juan Manuel Santos is demonstrating that respect in several ways, through the location of the meeting in Havana, through the composition of the panel, and most importantly, through the inclusion of and focus on testimonials of war victims from both sides of the half-century of conflict.

Although the Santos government does maintain positive relations with Cuba, Havana has an even tighter connection with the FARC, which has maintained a firm alliance with Marxist-Leninist philosophy since its beginnings during agrarian movements of the early 1960s .With a more or less neutral ground established, Santos sent his highest ranking military official, General Javier Florez, to meet face to face with the FARC leaders, a message that the Colombian administration respects the legitimacy of the group. This gesture also opens the door for FARC guerillas to lay down their weapons and reenter society without fear of being exterminated.

Finally, the inclusion of victims’ testimonials have taken center stage, stirring up heavy emotions on both sides. The presence of victims at the peace talks represent an acknowledgement that grave injustices have been committed by both sides, not just by the FARC guerillas. A great deal of tension surrounds the failure of the government’s right-wing factions to accept responsibility for the alleged crimes and human rights violations. However, Santos’ negotiating team has emphasized that a goal for these talks is to “satisfy the victims’ rights to truth, remembrance, justice and the admission of responsibilities. Andrés Gaudín addresses the role of the testimonials in the Havana peace talks in this week’s issue of NotiSur.  See additional coverage of the talks in Granma,the official newspaper of the Communist Party of Cuba.

 -Jake Sandler

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Cartel of Cartels in Mexico: Four of the most notorious and ruthless drug cartels in Mexico have apparently proposed joining forces rather than fighting each other in turf battles. Intelligence reports from the US and Mexican governments indicate that leaders from the Cartel de Jalisco Nueva Generación (CJNG), the Carrillo Fuentes organization (also known as the Juárez cartel), the Beltrán Leyva cartel, and the Zetas held a meeting in the city of Piedras Negras in Coahuila to discuss the possibility of forming some sort of alliance. The latest issue of SourceMex provides more details.

Mexican Court Upholds Ban on GMO Corn. A Mexican federal court handed multinational seed companies another setback with a ruling against the Swiss-based seed company Syngenta, which had appealed a ban on the use of genetically modified (GM) corn in Mexico. Carlos Navarro expands on this development in the latest edition of SourceMex.

Brazilian Elections. The untimely death of Partido Socialista Brasileiro (PSB) candidate Eduardo Campos has added a new dynamic to the Brazilian elections. Campos' replacement Marina Silva could actually prove to be a more formidable opponent to President Dilma Rousseff (Partido de Trabalhadores, PT), and conservative challenger Aécio Neves (Partido da Social Democracia Brasileira, PSDB). Silva has a broad base of support thanks to her politics and biography. Her sustainability credentials appeal to urban leftist intellectuals and progressive youth. Gregory Scruggs tells us more about the upcoming Brazilian elections in the latest edition of NotiSur.

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Legal Challenges Filed Against Tax Reforms, Particularly Higher Value-Added Tax in Border Communities

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Article from SourceMex, March 12

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