Republican lawmakers are preparing bills to tax remittances to the United States.

Remittance taxes are emerging as another Republican tool against undocumented immigrants, with at least two proposed bills that could have catastrophic consequences for Latin American countries.

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The “Big, Beautiful Bill,” introduced this week by House Republicans for consideration, includes a 5% special tax on remittances. The House of Representatives is also set to debate the “Border Security Investment Act,” which proposes a 37% fee on money transfers sent to the five countries whose citizens or nationals have the highest number of illegal entries into the United States.

“Instead of improving the outlook for undocumented immigration, these proposals are going to make it worse. These Republican lawmakers are ignoring the root of the problem, which in most cases is poverty,” said Juan Jose Gutierrez, director of the Full Rights for Immigrants Coalition.

The Mexican American activist said that imposing any of the proposed remittance taxes—even the 5% one—would hurt already impoverished regions across Latin America. “This will have the opposite effect. If families no longer receive enough money to survive, they’ll be forced to follow in the footsteps of their loved ones already living in the United States,” he said.

Teresa Tejada, director of the Salvadoran Association of Los Angeles (ASOSAL), predicted a “catastrophe” for Central American economies if either of the tax proposals passes.

Family remittances from the Central American diaspora in the U.S.—which accounts for more than 95% of all such transfers—represent between 25% and 30% of Honduras’ gross domestic product (GDP), 20% of Guatemala’s and 24% of El Salvador’s.

Both Republican proposals support President Donald Trump’s immigration policy, which has made cracking down on undocumented immigration a top priority. The 5% remittance tax aims to fund the tax cuts promised by Trump and support border security initiatives.

The fee would apply to money transfers made by undocumented immigrants, permanent residents, individuals with work visas, or those protected by any immigration relief program. U.S. citizens would be exempt from the tax.

Congress is expected to fast-track the “Big, Beautiful Bill.” Although it currently lacks the votes for passage, activists worry the 5% remittance tax could survive in an amended proposal that garners broader support.

Since his first term, Donald Trump has backed imposing taxes on remittances—measures that could now help balance the cuts promised in his reelection campaign.

“The approval of a small remittance tax, even just 5%, opens the door for the rate to increase in the future,” warned Gutierrez, who hopes the 37% tax on remittances to the five countries with the most undocumented immigrants fails to advance.

However, Tejada pointed to even more extreme proposals, such as that from Rep. Carlos Gimenez, who recently asked Treasury Secretary Scott Bessent to eliminate remittances to Cuba altogether.

The backlash over the 5% tax proposal reached Mexico, where President Claudia Sheinbaum called the measure an “injustice,” noting that immigrants already pay taxes.

“Let’s be clear: How can they tax remittances if Mexicans already pay taxes over there? Every Mexican living in the U.S. pays taxes—whether they have documents or not, they all pay taxes,” she said.

teleSUR/ JF

Source: EFE

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