Tax Reformer Quits Guatemalan Government

by Mike Godfrey, Tax-News.com, Washington

24 June 2010

Juan Alberto Fuentes Knight has resigned as Guatemala's finance minister after powerful representations from the business sector succeeded in blocking his key objective of achieving tax reform.

After several attempts to introduce fiscal reform, Alberto Fuentes has left the government to take up a post in Mexico as regional technical advisor to the United Nations where he worked years ago.

Economy Minister, Ruben Morales, had also resigned earlier, citing "personal reasons", together with Energy and Mines Minster Carlos Meany. This came after influential business leaders on the Agricultural, Commercial, Industrial and Financial Affairs Committee (Cacif) rejected the tax proposals to finance the reconstruction in the wake of hurricane Agatha in late May.

Guatemala's President Alvaro Colom, had announced a "strong" fiscal reform to secure the necessary resources to rebuild the country, including income tax rises of "between 0.3-0.5%" and the possible creation of a tax on bank turnover. According to Colom, USD650-1bn was needed for the country recover from damage caused by the hurricane.

Guatemala has one of the lowest tax collection rates as a percentage of GDP in Latin America.

Recommended