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A reported blog on happenings around Latin America.

Taxes and the drug war

Low taxes in Central America make it hard for governments to combat drug war violence.
Guatemala violence drug war 2011 07 19Enlarge
A member of youth Human Rights organizations holds a sign reading "Enough" during a protest against violence in Guatemala City, on Feb. 8, 2011. (Johan Ordonez/AFP/Getty Images)

There tends to be a lot of gore and sensationalism in stories about the Mexico drug war.

But for a more academic take, check out this article from the Council on Hemispheric Affairs on the link between taxation and insecurity.

The gist of the argument: In Central America, tax revenue comes in at a notoriously low level. Consequentially, Central American states routinely have limited funds to combat the security threat posed by the rapidly expanding Mexican drug wars.

A few highlights from the article:

  • Tax revenue represented 13.53 percent of GDP in 2010 in El Salvador, Guatemala and Honduras. In Chile, it was 18.6 percent. In the United States, it was 26.9 percent.
  • Says Costa Rican ombudsman Ofelia Taitelbaum: “Tax evasion is the national sport.”
  • The tax code favors wealthier citizens by imposing indirect taxes on goods purchased, rather than direct taxes on income, property and capital.
  • The conclusion: "For Central American governments to have even the slightest chance of mitigating drug-related violence, they must find a way to raise tax revenue."

This has made Central America a deadly place to be of late. Check out the homicide map above, and read a few anecdotes from the ground:

  • Private guards outnumber policemen 7 to 1 in Guatemala. There are no standards for minimum training, age or experience for the guards, most of whom come from rural areas and don't have better than a sixth-grade education.
  • In most countries, an armed attack on a public bus on the country’s busiest highway might be considered front-page news. In Guatemala, bus attacks and other violent crime scenes occur with such frequency that journalists often debate about which to cover.

Follow Stephanie on Twitter: @stephaniegarlow

Read more: The ingenuity of Mexico's drug traffickers

http://www.globalpost.com/dispatches/globalpost-blogs/que-pasa/taxes-central-america-drug-war