Honduras Cuts Security Tax after Angering Businesses

In response to US Secretary of State Hillary Clinton's claim that wealthy elite and businesses of Central America aren't doing their part to combat drugs trafficking and violent street gangs, Honduran President Pepe Lobo endorsed a fiscal package aimed at increasing the state's anti-crime budget. However, opponents of the plan claimed that the tax hikes would discourage business.  Intended tax increases included a 5% base metal export tax and a 3% bank withdrawal tax, from which the private sector argued that tax revenues would far exceed the desired $79 million annually.  Two laws from the proposed plan stay in place: a 1% tax on mobile telephone companies and a 0.5% tax on fast-food restaurant profits. Lawmakers hope that the revised tax plan will provide sufficient revenue to make a dent in the drug and violent crime problems without making it impossible for private enterprise to survive.  The question remains as to which factor will be more detrimental the Honduran private sector: high taxes, or unsafe perceptions of the country that could discourage external investors? In 2010, Honduras had a homicide rate of 77 murders per 100,000 inhabitants, and Mexico, a country constantly painted by the US press as being violent and dangerous, had a homicide rate of only 14 per 100,000 inhabitants. 

Read it here at Reuters.