Guatemala forfeits spending on health infrastructure

“The decision to lower royalties from six percent to one percent meant that Guatemala forfeited more than US$28m in three years. In 2006, the fiscal cost of this tax incentive to one mining company exceeded Guatemala’s total spending on health infrastructure.”

We have highlighted many times before that the problems of tax take up from the business elites in Guatemala has denied the state much needed revenue to make a real difference to the lives of the country’s vulnerable poor. We presented here, how the government is failing in its fiscal commitments to food, health and education. How Guatemala has one of the lowest tax burdens in Latin America, as well as one of the most generous regimes of exemptions and tax breaks, and how this is attributed to the low tax collection and expenditure is attributed to the state’s historic control by elite sectors of the economy.

A relatively new way to address human rights and development is to focus on government spending and taxation. It is not only domestic taxation that is lacking in Guatemala; the above quote comes from a report by the UK development agency, Christian Aid, entitled Undermining the Poor: Mineral Taxation Reforms in Latin America. While OECD countries collect, through taxes, 35% of their GDP, Guatemala only collects 11.3% – far below what it needs to provide appropriate levels of social spending and to meet public investment needs to promote the growth of the domestic private sector.

In the case of Goldcorp, sector it seems that corporate tax payments are little or nothing due to them being given, legally, maquila status and that royalties paid by the company and royalties received by the government do not agree.

Whatever the truth of the numbers, as Hannah Richards notes in the Guardian, “The country with the highest number of private aeroplanes and helicopters per head in Central America is also the country with the highest rate of women dying from complications in pregnancy because they lack affordable transportation to a health centre.”

There is something terribly wrong here.

Categories: Human Rights

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