Guatemala. The Presidents of the Bi- National Chambers of Commerce in Guatemala, ASCABI, have solicited that the government implements a national state of prevention, as a measure to provide a better environment for foreign investment in Guatemala. The Bi-National chambers of Commerce consider this measure as an effective way to control delinquency and to promote security in the country. Guatemala´s private sector opposes any fiscal reform to support justice and security sectors in Guatemala.
Declaring a state of prevention includes the limitations of civil liberties and human rights, such as: organizing meetings, public manifestations, dissolve by force any meeting, any group or protest. It also limits carrying guns, except for the security forces, circulation and parking of vehicles at certain places and time frames. This measure also includes censorship for the media, including, radio and TV broadcasting, it can limit - censure - what kind of information is being broadcasted.
The last time a state of prevention was declared in Guatemala was in the department of San Marcos last December.
The Guatemalan private sector has been demanding measures to increase the security in the country since the government of Alvaro Colom took office. However, the private sector of Guatemala; CACIF, Chamber of Commerce, Chambers of Industry and Agro- Industry adamantly refuse to negotiate with the government any increase of taxes to strengthen the government's capability to respond to the security situation and other urgent national calamities.
Carlos Castresana, the director of CICIC, Guatemala's International Commission against Impunity, has repeatedly made a very simple but illuminating statement: "You get the security and justice that you pay for." Meaning, if you don't want to pay, you don't get any.
To understand the relationship between taxes and development, violence and impunity in Guatemala among other structural problems of the Guatemalan society, we decided to present independent statements, references to documents and opinions addressing the issue of Guatemala's fiscal policy. The reader can decide what the information means.
Guatemalans society deep division concerning the tax issues is not at all unique in the world, the situation is similar to the US, the Republicans or right wing sectors do not want to pay taxes, the rest does, not very happily but they certainly know they have to pay taxes or the IRS will get them.
Guatemala's IRS is weak and does not go after the big fishes, only the little one. Although a new era might be beginning with the apprehension of some high profile business men charged whit tax evasion and money laundering in the past few months. Also, the recent publications of trade mispricing (import-export) in Guatemala has put the private sector even more on guard.
Global Financial Integrity (GFI). New Report Finds Developing Country Governments Lose $100 Billion Annually Due to Trade Mispricing.
February 12, 2010. Monique Perry Danziger.
http://www.gfip.org/index.php?option=content&task=view&id=293
Washington, DC -- Developing country treasuries are losing approximately $100 billion dollars every year due to trade mispricing, according to a new report available today from Global Financial Integrity (GFI). "Every year crime, corruption, and tax evasion drain $1 trillion out of developing countries," said GFI director Raymond Baker, citing figures from GFI's 2008 report, "Illicit Financial Flows from Developing Countries 2002-2006." This report builds on the analysis put forward in our "Illicit Flows" report by more closely examining one particular form of financial outflow - trade mispricing - and showing how it removes money from a developing economy, in this case by depriving the government of tax revenue.
Guatemala lost approximately US$344 millions in export taxes and US$901 millions in import taxes from 2003 t0 2006, according to IMF, GFI.
A Conversation with Stephen McFarland, United States Ambassador to Guatemala
Source: A Conversation with Stephen McFarland, United States Ambassador to Guatemala. By Daphne Morrison. October 20, 2009 http://www.thedialogue.org/page.cfm?pageID=32&pubID=2135&s=
The United States the United States Ambassador Stephen McFarland stated last October: "Another key issue for the Guatemalan government is fiscal reform. The Guatemalan state is chronically underfinanced," the ambassador said, it has the worst track-record of tax collection after Haiti. McFarland said Guatemalan President Álvaro Colom is keen on reform, but with elections less than two years away, the issue will likely fall by the wayside. "
EUROPEAN COMMISSION. GUATEMALA. COUNTRY STRATEGY PAPER.2007-2013
29.03.2007
http://ec.europa.eu/external_relations/guatemala/csp/07_13_en.pdf
Improving the tax system and the quality of social spending are important challenges for the country in its efforts to build social cohesion. Tax collection is very low (only 10% of GDP in 2004), and falling short of the modest goal of 12% set in the Peace Accords. Despite improvements in 1999 and 2000, the situation has worsened since then. The tax system suffers from a narrow base, a weak administration, widespread evasion, and low taxation rates. It also relies heavily on indirect taxes such as VAT (44.8% of total tax collection in 2006) and less on income taxes (20.6% in 2006); at the same time there are many exemptions. Following unsuccessful attempts to reform the system in June 2004, the Government is experiencing a limitation of resources that could only be counterbalanced by a new tax system. As a consequence of low taxation, government social spending (4.5% of GDP in 2006) is one of the lowest in Latin America and is still insufficient to meet the commitments undertaken by the State through the Peace Accords or to achieve the MDGs.
Evaluation Brief UNDP. June 2009.
The context in Guatemala has been characterized by deep divisions in the population, reflected in a shifting political party spectrum as a consequence of weak coalitions since the Peace Accords. Overall tax collection has traditionally been very low, and the legal framework for public administration complicated.
http://www.undp.org/evaluation/documents/brief/ADR-Briefs-Guatemala.pdf
EDC Guatemala December 2009. Jorge Rave
http://www.edc.ca/english/docs/gguatemala_e.pdf
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Political Violence: A legacy of the country's 36-year civil war is the persistence of violent crime and political violence, although the latter has somewhat decreased. Containing violent crime is one of Guatemala's most pressing concerns. The increase in criminality is blamed on local gangs (maras), but there is increasing evidence of support from trafficking and criminal networks in other Central American countries, Mexico and the United States. These links, plus the extent to which drug traffickers have infiltrated parts of the government and key security forces are particularly worrying. Guatemala has spearheaded efforts to counter crime in the region, but its scarce financial resources, stemming from very low tax collection, limits the country's ability to mount an effective campaign against gangs, traffickers, and organized crime.
The Economist. Malnutrition in Guatemala: A national shame.
Samuel Loewenberg. August 27, 2009
http://www.economist.com/world/americas/displayStory.cfm?story_id=14313735
It is hardly one of Latin America's poorest countries, but according to UNICEF almost half of Guatemala's children are chronically malnourished-the sixth-worst performance in the world. In parts of rural Guatemala, where the population is overwhelmingly of Mayan descent, the incidence of child malnutrition reaches 80%.-...........What makes this even more distressing is that Guatemala is rich enough to prevent it.
...... Income inequality remains extreme, even by Latin American standards. Two-thirds of the rural population remains poor. Guatemala came second to bottom of a new index measuring inequality of opportunity in Latin America published by the World Bank last year. ....The government fails to collect enough taxes from wealthier Guatemalans to provide good schools and health care for the majority.....several attempts at tax reform over the past decade have foundered in the face of entrenched political resistance.
EU supports Guatemala's Food Security with 33, 8 M Euros
http://www.guatemala-times.com/news/guatemala/1371-eu-supports-guatemalas-food-security-with-33-8-euros.html
On February 10, 2010, at a Press conference where the EU announced it's support for the Guatemalan Food Security with 33, 8 M Euros, the representative of the European Union in Guatemala, Rafael Señan Llarena stated that on the causes of the high malnutrition in the country, "it is a problem caused by severe social inequality, a weak state, very low governmental budget and therefore a weak organizational and coordination response of the actions needed to tackle the problem."
A right or a privilege- fiscal commitment with health, education and food in Guatemala ¿Derechos o Privilegios? el compromiso fiscal, con la salud, la educación y la alimentación en Guatemala.
A report released early in November 2009, by the Guatemala-based Instituto Centroamericano de Estudios Fiscales (ICEFI) and the United States- and Spain-based Center for Economic and Social Rights (CESR), attempts to tackle the difficult question of why Guatemala has experienced consistent levels of inequality and deprivation despite having the largest economy in Central America. CESR and ICEFI claim that the failure of Guatemala to implement a "fair and progressive" tax policy violates the social and human rights of its citizens and has led Guatemala to fall behind on human development indicators - some indexes put Guatemala on par with sub-Saharan African countries.
Source IPS: Eli Clifton. November 23, 2009. http://ipsnews.net/news.asp?idnews=49387
http://www.cesr.org/article.php?list=type&type=33
http://www.icefi.org/
