More taxes, less development.

Today, I want to talk about the aproval of new taxes from a legislative point of view. These taxes are being created to cover "social investment" costs that have been leadered by Alvaro Colom, and have been called "Social Cohesion".

On February 24, the presence of Finance Minister Juan Alberto Fuentes, the head of the Superintendency of Tax Administration, Rudy Villeda, and the president of Banco de Guatemala, Maria Antonieta de Bonilla, was announced in the the benches of the Guatemalan Republican Front (FRG), banking Guatemala (BG), Nationalist Change Union (UCN) and the Partido de Avanzada Nacional (PAN), in order to ensure their vote on new taxes. It seems they have failed to convay a good case, not being able to proove how this new investment will compensate or justify the pressure and weight this new tax law will put on Guatemala´s already challenged economy.

I agree with the political parties´s skeptisism. I am not convinced that the outcome of this "Social investment" will indeed take guatemala to a healthier economy, not even in the long run.


I am Particularly impressed by Maria Antonieta de Bonilla´s stance, who has spoken in favor of new taxes. While I usually respect her postures and think highly of her as an economist, this particular situation si clearly against basic economic precepts, and does not follow the guidelines previoulsy mentioned by our government. Supposedly, a "social market economy", enacts that in times of crisis, the government should promote the reduction of tax, and not the opposite.

Moreover, why is there no clear opposition from the Patriot Party, the Unionist Party and the GANA? The Patriot Party and GANA have already shown that, despite their publicly open stance against the government´s mayor strategies, they always find some partisan advantage in approving their propposals.
The Unionist Party, leadered byMarianto Rayo and Jose Alejandro Areval, has enacted a right-wing liberal ideology in order to get into the legislative branch. Now, their lack of action against this new tax proposal has canceled out any authenticity and credibilty as a true right wing party, robbing the whole party of voice to promot free-markets when setting precedent that is contradictory to their new beliefs.

It seems that the only congruent series of actions the government has kept is behind their promise to do whatever it takes to get to where they want. Meanwhile, Guatemalas unstable economy is facing the threath of new taxes, an investment they have failed to proove as either necesary or benefitial. More taxes, less development.