Honduras has struggled to raise appropriate revenues from corporate taxation and wealthy individuals, especially following a series of exemptions and loopholes created by successive post-2009 coup governments. These loopholes, coupled with banking secrecy and opaque systems of masking beneficial ownership, placed Honduras on the path to being labelled a tax haven.

The total lost to these loopholes and exemptions in the period 2010 to 2023 is more than the entire national public debt in Honduras. According to official statistics, Honduran national public debt stood at $16.6 bn USD at the close of 2023. It is estimated that the value lost to the treasury from tax exemptions and loopholes granted between 2010 and 2023 is $20.1 bn USD.

The Tax Justice Law seeks to turn the page on this period. It institutes the progressive principle that those with more should pay more, simplifies the tax system to remove loopholes and increases transparency. The Law proposes to close the loopholes that permitted large-scale corporate tax avoidance, end corporate profit shifting as a method to reduce tax by assessing global, not just national profits, tax corporate and individual income received from abroad, end tax debt write-downs, which served as a disincentive for meeting tax liabilities promptly and in full, end banking secrecy for tax matters, make beneficial owners of corporations liable for taxation, shining a light on opaque corporate structures, and promote the international exchange of information to improve tax justice through ratifying the OECD’s Convention on Mutual Administrative Assistance in Tax Matters, of which 147 countries currently participate.

Taken together, this robust package of reforms is likely to raise revenue for the Honduran state without increasing tax rates or creating new taxes. It also strikes a blow against the global tax haven regime and banking secrecy industry, setting an example to other countries whose tax jurisdictions are currently used to undermine the tax takes of other states through facilitating tax dodging.

Such tax transparency will likely aid Honduras’ development with greater funds available for social, economic and environmental goals. As part of the Law, the Honduran government is proposing two new tax regimes aimed at industrial development and foreign investment. Unlike previous tax incentives, these will be time-limited, only for specific taxes and with controls to ensure public benefit, through job creation and development.

The global consensus among economists and policy makers holds for an urgent need to deal with tax dodging, tax havens and banking secrecy zones, in addition to further developments. Following the leadership of the African countries Group, all countries of the world are now participating in the Ad Hoc Committee to Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation. The terms of reference, to be completed by August this year, will form the basis for the creation of a globally inclusive tax body aimed at delivering on this crucial agenda. Furthermore, in 2021, more than 130 countries, under the OECD Inclusive Framework, agreed on a series of measures, including a global minimum tax on large corporations at the international level. In addition, in March of this year, the G20 Brazilian Presidency, began discussions to consider, for the first time, greater progressivity in the taxation of the income of the super-rich, including the possibility of establishing a minimum level of taxation on large fortunes. Meanwhile, in Latin America, progressive tax reforms are being promoted within intergovernmental regional integration organisations, where the role of the Community of Latin American and Caribbean States (CELAC) will be important. Lastly, the Regional Platform for Tax Cooperation for Latin America and the Caribbean (PTLAC) has also been articulated and seeks to unify the voice of the countries of the region to better represent the interests of its peoples in international processes, and to advance in a coordinated manner in international forums.

Honduras’ proposed Tax Justice Law puts these principles into action. We, the undersigned, express our support for the reform package that is set to establish a fairer and more robust system of taxation and incentives that will provide a sounder footing for Honduran development. Such a Law has implications far beyond Honduras’ borders, setting an example of how states can assert sovereignty through taking action against tax injustice individually and collectively.

Full list of signatories:

José Antonio Ocampo

Joseph Stiglitz

Jayati Ghosh

Jeffrey Sachs

Gabriel Zucman

James Galbraith

Ann Petifor

Yanis Varoufakis

José Gabriel Palma

Dean Baker

James K Boyce

Patrick Bond

Sankar Varma

Jason Hickel

Adrien Fabre

Trevor Evans

Fidel Aroche Reyes

Andrés Arauz

Nuno Barroso

Mange Ram Adhana

Kathleen McAfee

Gustavo Indart

Malcolm Sawyer

Roos Saalbrink

Óscar Ovidio Cabrera Melgar

Alex Cobham

José Miguel Ahumada

Juan Pablo Martínez Ortiz de Taranco

Christian Pino Garrido

Jerome Roos

Pedro Francisco Paez Perez

Lorena Valle Cuéllar

Alejandro Vanoli

Daniel Rojas

Ndongo Samba Sylla

Monica Bruckmann

Juan Pablo Pérez Sáinz

Farwa Sial

Colin Besaans

Richard Kozul-Wright

Ricardo Martner

Martin Guzman

Mary Robertson

Carlos Marx Carrasco Vicuña

Diego Borja Cornejo

Liam Campling

James Meadway

Cecilia Rikap

Isabella Weber

Manuel F Montes

Fadhel Kaboub

Camila de Caso

Rodulio Perdomo

Juan Arancibia Cordova

Jason Rosario Braganza

Luis Moreno

Nathalie Beghin

Efraín A. Díaz Arrivillaga

Cristóbal Otero

Emmanuel Saez

Ignacio Flores

Matti Kohonen

Mercedes DAlessandro

Pedro Rossi

José Ricardo Barrientos Quezada

Daisy Guadalupe Avila

Gloria García-Parra

Aaron Schneider

Amparo Canales

Abdul Muheet Chowdhary Gustavo Irías

Magdalena Sepúlveda Carmona

Ana Ortega Flores

Mirta Kennedy

Richard D Wolff

John McDonnell

César Augusto Sención Villalona

José Efraín Deras

Mauricio Díaz Burdett

René Ramírez Gallegos

Jorge Coronado Marroquín

Adrián Falco

Andrés Chiriboga