President Funes Proposes Tax Reform

    The tax reform proposed by President Funes that eliminates income tax for those with the lowest income, has entered the Legislative Assembly. This reform is said to eliminate income tax for those in the lowest tax bracket, keep it the same for those in the middle, and increase it for those in the upper tax bracket.
     At the press conference on Sunday, San Salvador's Archbishop Monsignor Escabar Alas spoke on behalf of the Catholic Church and their stance on this reform. According to him, the Catholic Church is in favor of this reform as long as it contributes to human development and "alleviate[s] the economic crisis among people with greater needs" (DiarioCoLatino).
     According to El Faro, the government's proposal will eliminate income taxes for about 260,000 of those in the low wage/ lower income tax bracket. Most Americans are probably thinking right now 'So who is going to pick up the slack?' Well that would be those in the highest tax bracket such as companies, corporations and individuals that have higher incomes. Many Americans would probably detest this approach because it is too similar to the Robin Hood theme of steal from the rich and give to the poor. However, the Salvadoran government does not view this as stealing from the rich, as the rich are already making an exorbitant amount of money that this increase will hardly make a dent in their overall income. The current taxation, on the other hand, is the difference between an additional meal per day or money towards a child's schooling for those in the lowest tax bracket. Therefore, by eliminating the income tax for those with the lowest income the government will be improving its economy by allowing more money to circulate through the markets and education sectors, which will in turn ensure macroeconomic stability by creating jobs and boosting growth. At  least that is the idea promoted by those in support of this reform.
     In order for this reform to be passed 43 of the 84 deputies in the Legislative Assembly need to vote yes. If this reform is passed it will be the first change in the income tax collection since 1991 (El Faro). Unfortunately, it must be kept in mind that this reform is being introduced during an election period. Which means that many running for re-election will have to face difficult questions from the public regarding its effectiveness and when results can be expected (LaPrensaGrafica). If the public isn't on board, it is doubtful that Funez and the reform will acquire the 43 needed votes (especially considering the 84 deputies voting are most likely among those expected to receive the tax increase).