Although the United States Remittance Tax was reduced to 1% from the original 5% proposal, the tax will now apply to the entire population of the country, which would reduce shipments by 1.6%, with Mexico, India and Central America as the most affected, they warn research institutes.
The “great and beautiful” law signed by President Donald Trump on July 4 reflects that reduction, but extends its impact to all Americans, and not only to the 48 million immigrants who were initially estimated as affected.
For every 1% additional tax, the volume of remittances will fall about 1.6% in the US, it exposes an analysis of the Center for Global Development (CGD), which points to Mexico as the most affected in absolute terms, as it would lose more than 1.5 billion dollars annually, followed by India (466 million) and Guatemala (415 million).
But in proportional terms, the most impacted will be El Salvador, which would receive 198 million dollars less, the equivalent of 0.62%of its gross national income, in addition to Honduras (175 million, or 0.55%), and Jamaica (79.8 million, or 0.42%).
The new tax would raise almost 10,000 million dollars from present until 2035, projects the Joint Taxation Committee (JCT) of Congress.
Trump has framed the tax on his migratory agenda, since the “great and beautiful law” also provides $ 170,000 million for its border migration and security policy, with a record of 75,000 million dollars for the immigration and customs service (ICE) and 46.6 billion for the wall with Mexico.
“We are going to completely finance the final sections of the border wall, to impose a new money in money sent back to foreign countries, already dramatically increase deportations to a minimum of 1 million per year,” the president said when defending his proposal in June.
Despite being lower than expected, the rate adds to the average of 6.5% that migrants already pay commissions to the companies of transfer by sending electronic remittances, the researcher Carmen Leon-Himmelstine, of Overseas Development Institute (Odi Global) explains to Efe.
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Remittances from the US would fall to 1.6% with the new 1% tax
In addition, the tax counteracts the objective of the United Nations to reduce to 3% the commission paid by migrants in remittances, adds the expert.
“It will have a significant impact on migrants who send amounts between $ 250 to $ 300 per month, say, those who send small amounts are the ones that are going to be most affected,” he says.
The impact rises when considering that, being the country with more immigrants, the United States is also the main source of remittances in the world, by concentrating a quarter of the total shipment, with an estimated of more than 200,000 million dollars, according to data from the World Bank updated at the end of 2022.
Therefore, this has aroused reactions in Mexico, the second largest remittance receiver in the world, with a record of almost 65,000 million dollars in shipments in 2024, almost 4% of its Gross Domestic Product (GDP), so the president, Claudia Sheinbaum, has promised to reimburse money to migrants.
Despite official estimates, Leon-Himmelstine considers that remittances will persist, since the tax will only push migrants to informal methods, such as sending dollars through friends, family, packages or even cryptocurrencies, channels with the presence of organized crime.
Therefore, the expert does not expect the tax to have the desired effect by its defenders, such as discouraging the arrival of migrants or promoting their “self -exporting.”
“Most likely, let’s not see this because, too, what is seen in many countries is that the less remittances they arrive, in the long term it can increase migration,” he warns.
With EFE information.
