You Better Pray the Honduran Taxman Likes You

The new tax code proposed by the Hernández administration spells trouble for the already heavily burdened citizens of Honduras.
The new tax code proposed by the Hernández administration spells trouble for the already heavily burdened citizens of Honduras. (El Heraldo)

EspañolSince President Juan Orlando Hernández took office two years ago in Honduras, citizens have had to deal with an increasingly frenetic, abusive, and illegal tax-collection agency.

Far from adjusting fiscal revenues to the country’s economic capacity, the Executive Revenue Office (DEI) has focused on extracting every last drop from hard-working Hondurans, presumably so that officials can meet monthly objectives and cash in bonuses.

In the face of this situation, civil society demanded a tax reform to stop the state’s insatiable appetite, its shutdown of businesses, and the spectacular raids that the police have conducted in plain view of stunned tourists.

In response, the Hernández administration offered a new tax code that simplifies paperwork and makes Honduras more attractive for businesses.

Business leaders welcomed the proposal, but they fail to see the dangerous power imbalance it will create. Trusting the government to draft a new tax code is like putting the fox in charge of the henhouse.

Instead of offering improvements, the new code turns the DEI into an omnipotent entity, with powers normally reserved for the judiciary or the legislature.

It is an unconstitutional reform that infringes on fundamental individual rights, as well as our form of government and democracy itself.

Power to Collect by Any Means

If the government’s tax code proposal succeeds, the tax agency will have six months to respond to any appeals or requests. This means that if the DEI targets a certain Honduran business, the firm could end up waiting for half a year — enough time to bankrupt any company — before it can resume operations.

Furthermore, the tax agency will have the authority to raid businesses, and confiscate their goods and documents, without a court order. If the DEI requests the help of public security forces, “it will be granted without further formalities,” the document literally reads.

Currently, Honduran law prevents the state from confiscating even the most violent drug lord’s possessions without the authorization of a judge. It should also be noted that this new tax code allows the DEI to investigate a firm for up to two years.

In a crass attempt to circumvent oversight and replace the judiciary, the Honduran tax agency will be able to impose precautionary measures, order confiscations, and extract from taxpayers the debt that the agency says they owe the state.

In other words, the DEI will be able to unilaterally set the amount due, declare it legitimate, and proceed to collect it by expropriating goods. This completely ignores our rights to due process, to a defense, the presumption of innocence, and minimal guarantees that protect one’s fundamental rights.

Without a court order, or even the presence of a public prosecutor or any other entity that protects citizens, these military-like raids could further violate fundamental rights to property, safety, and human dignity.

Worst of all, no law-abiding Honduran will be able to conduct business knowing that the state could arbitrarily interrupt him any given day.

Unfortunately, business unions in Honduras have reacted to this threat more like bureaucrats than the dynamic productive sector that they represent.

No Recourse

And it doesn’t end there. If a Honduran citizen falls victim to any of the aforementioned predatory strategies, he will hardly find recourse in the country’s courts.

The reform stipulates that before an individual can file suit, he will have to wait two years and pay up the alleged debt in full.

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This violates the guarantees to a fair and swift trial inscribed in the Universal Declaration of Human Rights (Article 10), the American Declaration of the Rights and Duties of Man (Article 18), and the American Convention on Human Rights (Article 8).

In the Middle Ages, Spanish kings abused their power to steal goods from the public. Confiscation became law as a way to target political opponents, particularly those with large assets.

For that reason, the noblemen themselves designed mechanisms to ensure that an independent court, and not the king alone, oversee all processes involving prison sentencing and confiscation.

These days, fiscal policy is the domain of the executive, the modern equivalent of the monarchy. As Honduras moves on to hold regional and presidential elections in 2016 and 2017, respectively, we must prevent the revival of this medieval practice that would allow the presidency to both accuse and judge citizens.

Honduras needs to come up with an alternative tax reform, because all the government’s proposal is after is to strengthen this leviathan. We cannot allow the reform to pass in Congress.

If we don’t act now, the cleptocrats’ most ambitious project in recent history will have succeeded.

Translated by Daniel Duarte.

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