Martelly’s plan to tax money transfers is very bad for Haiti

Martelly’s plan to tax money transfers to Haiti is the single most destructive item on his agenda platform so far and sadly represents a continuation of the status quo whereby the elite still refuses to play by the rules . On the surface, the surcharge looks pretty innocuous. After all, it’s the big economic elephant in the room; an untapped goldmine that has been the most stable element of Haiti’s fragile economic infrastructure. And with its taxation being allocated toward the popular educational reform, it’s quite understandable why most of us would quickly agree to the proposal without giving it further consideration. But, if one looks deeper into the proposal, a couple of things start to become clearer; it’s not the Diaspora that’s going to feel the brunt of the tax, but rather the recipients of those money transfers. It’s pretty much akin to raising taxes on a single hard working mother with five kids, the children always end up feeling the brunt of the effect more. Similarly, when a hard working member of the Diaspora sends money to his family back in Haiti, that money helps those living in Haiti, and if taxed, it is those people who will feel the brunt of the effect of the surcharge, not the sender. Simply put, a $120 money transfer, if taxed $5 for example, will turn into a $115 remittance, hence less money for the receiver.
Moreover, such surcharge will certainly have a negative multiplier effect on the economy as consumption is likely to go down. The macro-economic indicators in Haiti have always shown remittances from abroad to play an integral role in the economic infrastructure of the country and have also created a spill over economic effect that has permeated every aspect of the country’s economy and daily life. When the financial crisis buffeted Haiti in the mid nineties, it was partly due to this money from abroad that Haiti didn’t suffer a full economic collapse.
Haiti continues to be beset by the same problems that have plagued it since its inception; those who possess the bulk of the resources refuse to abdicate some of the wealth in favor of their brethren. While it may be a universally practiced sin, one would think that a post earthquake Haiti would foster a different set of attitudes, albeit a patriotic one toward a country that has provided so many blessings to this small faction. By pushing Martelly to twist the arms of the Diaspora under the banner of Educational Reform in search of additional revenues, they have shown quite ostensibly that no amount of devastation will ever suffice to make them adopt a more Haiti-friendly posture, both geo-politically and economically. The sad truth is, it is the practice of capital flight, poor economic infrastructure, rampant corruption, and also political instability that have impeded economic progress in Haiti. As mentioned above, the rich in Haiti have greatly benefited from capital flight by funneling hundreds of millions of dollars worth of capital out of the country while reaping a hefty profit from the ensuing devaluation of the Haitian dollar as a result of their actions. These were the same people who pushed for de-regulation, privatization, and monetary policies during the Aristide presidency that have exacerbated Haiti’s economic woes even more. And now, with the poor in Haiti no longer being able to quench their thirst for easy capital, the elite have now set their sights on the Diaspora in a last ditch effort to abstain from having to abdicate some of their wealth toward the recovery of a country that they had never considered to be their own to begin with.

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10 responses to this post.

  1. Martelly is a tool. He’s trying to fund “free” education on the backs of the poor. I hope the people find creative ways to avoid this taxation without representation. Besides the Haitian Diaspora’s remittances, Martelly proposes to tax cell phone transactions. I hope not every cell phone company in Haiti has agreed to this onerous taxing of desperately poor Haitians and they can drop the ones that do. Of course, its the rich that benefit from this arrangement as always, because they are exempt or marginally effected, while this will be a real burden on ti malere yo.

    Reply

    • Posted by nzinga Dan on May 12, 2011 at 12:02 am

      Because to you, “free” education is such a bad idea? Governments cannot function without taxing. Not just for education but for development. How do you think other countries educate their people? They tax. It’s a shame to see Haitians criticize good things and applaud negativity. Hoping that cell phone companies do not pay taxes to the government is hoping for disobedience and disunity toward a collective vision. And this is the mentality that keeps Haiti as a charity case.

      Reply

      • Do you think that’s a good start for a new government ? Which has not even started working but increasing tax in already too high priced transactions.

  2. I think your concerns are well-founded. I’m not so sure however that a $120 transfer would become a $115 transfer to the recipient with a $5 surcharge. I imagine it would vary between $115 and $120 received depending on whether the sender just added the $5. Under typical economic rules which assume the sender is acting for profit, the surcharge would probably reduce how much is received. However because we’re talking about an emotional connection to the recipient as well as to the country (via Éducation pour tous), the sender should be a lot less sensitive to a surcharge in this case. Again, I think your concerns are absolutely important to consider, but I’m not convinced the surcharge on money transfers to fund education is definitely bad idea. As you mentioned, it really is one of the most stable parts of the economy in Haiti at the moment so it does make sense to use it to make one of the most important investments the country can make for the future. If not with the surcharge, how else can Haiti fund universal education?

    Reply

    • Do you think it is fair to JUST add $5 more dollars ?
      When you have a budget and all…

      Reply

      • $5 is a lot for many in Haiti, you’re right, but even if it’s a sacrifice it isn’t as much of a sacrifice for a Haitian living in America, not for something this important. Let’s be honest, if they have $120 to send, they have $125 too. Also, $5 was just the example that was used, I’m fairly certain it will be much less, perhaps $1 per $100 as Martelly once said and 5 cents per minute on calls. According to their rough estimates, this will put somewhere between 300,000 and 1 million students in school. I’m sure that if you explained to most Haitians sending money back home that this is what their $1 – $5 dollars would do, they would have no problem with it, even if they won’t be able to buy another carton of orange juice. If transaction fees are too high, that’s another issue to be dealt with in different ways, but it’s the private money transfer companies that receive those funds, not Haitian schoolchildren.

  3. stop seeing wrong all were let’s be positive and believe there is some good haitian we are not alll stupid idiot bastard

    Reply

  4. Posted by nzinga Dan on May 11, 2011 at 11:47 pm

    Something that is not actually talked about by the nay-sayers is the importance of education and taxing. Taxing is always off the backs of the people, but it is to get the service back, so it is not really money wasted. It’s not like the money is going to martely’s pockets or his personal business. The government should probably start taxing the NGOs too who have used charity as a cover up to do whatever they want in Haiti. Charity in Haiti is a business and the main industry. Poverty is the product, and they are grooming it well. NGOs have most of the money, the Haitian government recieves 1% of the aid money. The NGOs give the contracts to outside companies so the money never actually gets to Haiti and have a whole bunch of treats enforced by the international community. The more taxes the more services can be provided, and the more services by the State, the less poverty. And hopefully in ten years we won’t have to live off of handouts and like children.

    Reply

  5. My take is that Martelly’s maiden wrong shot will perhaps help focus on the aids embezzlements in Haiti and take the heat off the population. Regards

    Reply

  6. Posted by Zinga on May 26, 2011 at 6:12 pm

    If you have notthing to say just b quiet, some of you are there just ot destroy any positive id. Shame on you, what martelly try to do is to make a cacrifice to benefit our country, if we haitian don’t do it who s going to do it.HOW come when US impose you a tax everybody has to obey, but you, alreay try to destroy the project, china, india, japan are powerful now because their own people make the sacrifice to help their country, instead of start destroying the plan give a better alternative. haiti is for us if we dont do it fore our contry who s goign to do it fore us? clinton, canada, us, france, thst is why these country has no respect for us, we always see everything is too much , too hard, we, haitian has to STOP the negativism,

    one thing i hope martelly stop, the birth control, haitian have to many babies, expecting the NGO to feed them, all the time,
    to finish please, if you don’t like martelly i repsct ur choice, but whomever, to be in haiti side, STOP your senceless critic, specially whn you don;t even a better alternative. PEACE OUT!!!!!

    Reply

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