RemittancesGateway.org

Texas: Bill that would add 8% fee to remittances presented to panel

Wednesday, 16 March 2011 09:07

Source: El Paso Times
By: Zahira Torres \ Austin Bureau

Sending money to family members in Latin American countries would get more expensive under a bill Republican state Rep. Leo Berman presented before a House committee late Monday.

The bill would add an 8 percent fee to the total amount of money sent for personal reasons from Texas to Mexico and Latin America. Wire transfers to other countries such as Canada or England would not be subject to the fee.

Berman, R-Tyler, said it's a way to recoup some of the costs of providing health care to undocumented immigrants during trying economic times. The state faces a budget shortfall of up to $27 billion.

A fiscal note by the Legislative Budget Board cites potential legal challenges such as attempting to regulate foreign commerce and violating the right to equal protection under the law guaranteed in the U.S. Constitution.

Costs of such litigation cannot be estimated, according to the budget board. If the legislation complied with the Constitution, the fee could generate about $60 million annually for Texas, budget board officials said in the note, adding that the estimate was "strictly for purposes of providing an illustrative example."

The money collected from the fee would be set aside to help pay for indigent health care, according to the bill.

"I would rather give Texans, U.S. citizens, free health care than I would to people who are here illegally," Berman said.

Refunds would be given to Texans who fill out forms and mail them to the state comptroller with proof of citizenship or legal residency.

The comptroller's office estimates that the agency would have to hire about 50 additional full-time employees to absorb the increased workload, collect and refund the fee and audit the businesses that take in the fee.

It is unclear if the bill will make it out of committee or if it will gain traction under the new 101-49 Republican-dominated House. If it clears the House, the legislation will have a tougher time getting through the Senate where Democrats still have the ability to stall legislation.

State Rep. Dee Margo, of El Paso, is one Republican who does not see himself rallying behind such a bill. Margo said the cost of collecting the fee would likely exceed any revenues generated for the state.

"It's harsh and it's punitive and seems to be singling out a particular group," Margo said, adding that he has not read the entire bill but is familiar with it.

Proponents of the bill, which included two witnesses who testified Monday evening, complained about the cost of illegal immigration in the state and said the fee would make Texas a less attractive state for undocumented immigrants.

Opponents say the bill does not equally impose the fee on everyone who transfers money outside of the state, targets U.S. citizens who send money to Latin America and could be considered a state-initiated tariff.

Latin American and Caribbean immigrants working in the United States last year sent about $58.9 billion in remittances to their home countries, according to a study released Monday by the Inter-American Development Bank's Multilateral Investment Fund. Mexico received $21.3 billion of the money.

The last state-by-state breakdown by the group in 2008 indicated that wire transfers from Texas to Latin America totaled about $4.3 billion.

Natasha Bajuk, who follows remittances for the organization, said imposing additional taxes or fees on wire transfers of money to other countries will only push people to send money through informal channels, rather than formal channels.

In other words, a worker sending money home to his family to pay for food, shelter or health care would decide to send cash instead of wiring the money through a bank or other traditional channel.

Bajuk said that would have the opposite effect for those who are hoping to access additional money to put in state coffers.

Though immigrants do send money to their families in other countries, they also spend most of their earnings in the United States and contribute to the tax base, said Roberto Coronado, an economist with the El Paso branch of the Federal Reserve Bank of Dallas.

"They have to rent an apartment and buy a car," Coronado said. "They have to live in the U.S. and, therefore, they have to spend some of their money in the U.S."