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RNZ News
01-07-2025
- Business
- RNZ News
What does the US remittance tax mean for the Pacific?
A view of the US Capitol in Washington on 30 June 2025. US senators began voting Monday on Donald Trump's flagship spending bill, as the deeply divisive package -- expected to slash social programs for the poor and add an eye-watering $3 trillion to the national debt -- entered its frenetic home stretch. Photo: AFP / Jim Watson The United States is set to implement a tax on remittances paid by migrants to their communities overseas. The tax is a component of the " One Big Beautiful Bill ", a cornerstone fiscal measure under President Donald Trump. When the spending bill passed through the House of Representatives, the tax was set at 5 percent. The US Senate reduced it down to 3.5 percent, and now again to 1 percent. The bill has undergone numerous amendments in the Senate before it goes back to the House for final negotiations and then to the White House. However, even if the final tax level falls on the lower end, Pacific development experts say that both direct and indirect impacts pose a significant threat to the region. Deep within the pages of congressional reports on the "One Big Beautiful Bill" lies a section titled "Removing Taxpayer Benefits for Illegal Immigrants". The tax takes aim at outward flows of income generated by illegal immigrants within the US economy, one of several measures designed to disadvantage illegal immigrants financially. Remittance transfer providers, such as US banks, credit unions, or licensed brokers and dealers, would collect the tax at the point of transfer before the remittance is sent abroad, increasing the cost of sending remittances. The tax applies to all US citizens and nationals sending money overseas, though it had originally been aimed only at illegal immigrants before a Senate redraft on 30 June. With the US responsible for the largest global share of remittances, particularly to Latin America and the Caribbean, critics argue it could cause serious damage in the developing world. In May, Mexican President Claudia Sheinbaum denounced the tax as "a measure that is unacceptable". It is also proven controversial in right-leaning circles, particularly among libertarians, prompting draft after redraft of the policy. The American Enterprise Institute, a conservative-leaning think tank, called the tax "poorly designed". "Although the Senate bill's narrowing of the tax would greatly diminish these problems, it would not eliminate them. That outcome can be attained by rejecting the remittances tax in its entirety." The US Migration Policy Institute estimates that, as of 2023 there are 166,389 immigrants currently in the US who were born in Oceania (other than Australia and New Zealand). The Pacific Network on Globalisation (PANG), an organisation of civil society groups throughout the region, said the tax will have "profound implications" on Pacific livelihoods. PANG deputy coordinator Adam Wolfenden told RNZ Pacific that, while relatively less remittance cash finds its way into the Pacific, these are nations who rely on it. "For a country like Samoa, which gets 20 percent of its remittance money from the US, we'll see that cut. For a country like Tonga, for who the US is its biggest source of remittances at just over 35 percent, this will see a cut." "Studies have shown that any increase in the cost of sending money home has a larger impact." According to the World Bank, sending remittances currently costs an average of 6.62 percent of the amount sent, thanks to things like provider fees. Wolfenden pointed to a study by the Center for European, Governance and Economic Development Research, which found that demonstrates that one percentage point increase in remittance costs would correlate with a 1.6 percent decline in the amount that reaches it's final destination. A potential 3.5 percent tax would reduce remittance flows by 5.6 percent, PANG said. "The fear is that, for those who receive remittances in those domestic economies, particularly that rely on remittances to fund a lot of consumption, the tax will ultimately lead to some kind of decrease in economic growth. Amid other US actions in the Pacific, such as massive cuts to aid, tariffs and increased militarisation, Wolfenden believes the US simply is not considering the Pacific in the decision making. "I think they are promoting their interests above all else. And I think that is a short-sighted view towards what a relationship with the Pacific means." The Australian National University's Development Policy Centre deputy director Dr Ryan Edwards called the tax "terrible". "Remittances can get sent in many ways. There's the cash ones which will be targeted through formal channels, and informal channels, where people often just carry it back in their suitcases and declare it or find other ways," he said. "This will push everything to the informal channel market, which many countries have tried for a long time to move people away from for security reasons." Edwards told RNZ Pacific that he is concerned about the precedent the policy will set, and what kind of signal it would send to governments with significant aid contributions. "We have seen the current US administration testing the waters with international trade, aid, and other things. [These things] tend to benefit both sides in ways that we often do not pick up at a first glance. "It is a slippery slope in terms of setting an example, and the US has historically had a role as a global example not so much anymore."
RNZ News
30-06-2025
- Business
- RNZ News
What does the US remittance tax means for the Pacific?
A view of the US Capitol in Washington on 30 June 2025. US senators began voting Monday on Donald Trump's flagship spending bill, as the deeply divisive package -- expected to slash social programs for the poor and add an eye-watering $3 trillion to the national debt -- entered its frenetic home stretch. Photo: AFP / Jim Watson The United States is set to implement a tax on remittances paid by migrants to their communities overseas. The tax is a component of the " One Big Beautiful Bill ", a cornerstone fiscal measure under President Donald Trump. When the spending bill passed through the House of Representatives, the tax was set at 5 percent. The US Senate reduced it down to 3.5 percent, and now again to 1 percent. The bill has undergone numerous amendments in the Senate before it goes back to the House for final negotiations and then to the White House. However, even if the final tax level falls on the lower end, Pacific development experts say that both direct and indirect impacts pose a significant threat to the region. Deep within the pages of congressional reports on the "One Big Beautiful Bill" lies a section titled "Removing Taxpayer Benefits for Illegal Immigrants". The tax takes aim at outward flows of income generated by illegal immigrants within the US economy, one of several measures designed to disadvantage illegal immigrants financially. Remittance transfer providers, such as US banks, credit unions, or licensed brokers and dealers, would collect the tax at the point of transfer before the remittance is sent abroad, increasing the cost of sending remittances. The tax applies to all US citizens and nationals sending money overseas, though it had originally been aimed only at illegal immigrants before a Senate redraft on 30 June. With the US responsible for the largest global share of remittances, particularly to Latin America and the Caribbean, critics argue it could cause serious damage in the developing world. In May, Mexican President Claudia Sheinbaum denounced the tax as "a measure that is unacceptable". It is also proven controversial in right-leaning circles, particularly among libertarians, prompting draft after redraft of the policy. The American Enterprise Institute, a conservative-leaning think tank, called the tax "poorly designed". "Although the Senate bill's narrowing of the tax would greatly diminish these problems, it would not eliminate them. That outcome can be attained by rejecting the remittances tax in its entirety." The US Migration Policy Institute estimates that, as of 2023 there are 166,389 immigrants currently in the US who were born in Oceania (other than Australia and New Zealand). The Pacific Network on Globalisation (PANG), an organisation of civil society groups throughout the region, said the tax will have "profound implications" on Pacific livelihoods. PANG deputy coordinator Adam Wolfenden told RNZ Pacific that, while relatively less remittance cash finds its way into the Pacific, these are nations who rely on it. "For a country like Samoa, which gets 20 percent of its remittance money from the US, we'll see that cut. For a country like Tonga, for who the US is its biggest source of remittances at just over 35 percent, this will see a cut." "Studies have shown that any increase in the cost of sending money home has a larger impact." According to the World Bank, sending remittances currently costs an average of 6.62 percent of the amount sent, thanks to things like provider fees. Wolfenden pointed to a study by the Center for European, Governance and Economic Development Research, which found that demonstrates that one percentage point increase in remittance costs would correlate with a 1.6 percent decline in the amount that reaches it's final destination. A potential 3.5 percent tax would reduce remittance flows by 5.6 percent, PANG said. "The fear is that, for those who receive remittances in those domestic economies, particularly that rely on remittances to fund a lot of consumption, the tax will ultimately lead to some kind of decrease in economic growth. Amid other US actions in the Pacific, such as massive cuts to aid, tariffs and increased militarisation, Wolfenden believes the US simply is not considering the Pacific in the decision making. "I think they are promoting their interests above all else. And I think that is a short-sighted view towards what a relationship with the Pacific means." The Australian National University's Development Policy Centre deputy director Dr Ryan Edwards called the tax "terrible". "Remittances can get sent in many ways. There's the cash ones which will be targeted through formal channels, and informal channels, where people often just carry it back in their suitcases and declare it or find other ways," he said. "This will push everything to the informal channel market, which many countries have tried for a long time to move people away from for security reasons." Edwards told RNZ Pacific that he is concerned about the precedent the policy will set, and what kind of signal it would send to governments with significant aid contributions. "We have seen the current US administration testing the waters with international trade, aid, and other things. [These things] tend to benefit both sides in ways that we often do not pick up at a first glance. "It is a slippery slope in terms of setting an example, and the US has historically had a role as a global example not so much anymore."
The Guardian
24-05-2025
- Politics
- The Guardian
Critics say the movement to defund the police failed. But Austin and Seattle are seeing progress
After George Floyd's murder by a Minneapolis police officer in 2020, protesters who swarmed the streets across the US shouted the refrain: 'Defund the police.' An idea that was once viewed as radical – to redirect money from law enforcement to other city departments and social services – became a rallying cry overnight. As a result of continued pressure, dozens of jurisdictions throughout the nation promised to reduce their police budgets. While most of them backtracked and increased law enforcement funding in the next year or two, several cities changed policies or added new public safety and homeless services departments. Milwaukee is one city where leaders diverted money to social programs that had a lasting impact: funding from the police department went toward affordable housing and youth programming. After 2020 Seattle invested part of its police funding into participatory budgeting, a process in which the public votes on how to spend a portion of the city's finances. A few years later, inspired by calls for alternatives to policing from Black and brown organizers, Seattle leaders launched a third public safety department that responds to mental health crises. And Austin has increasingly invested more money in its homeless services since the city diverted millions of dollars from the 2021 police budget to go toward permanent supportive housing instead. Political organizers the Guardian spoke to said the abolitionist dream of divesting from police and reinvesting in social services is a long journey full of valleys. Backlash followed the 2020 protests, and public sentiment toward the movement quickly shifted. According to a recent Pew Research Center survey, 27% of respondents said greater attention to racial inequality in the US improved Black people's lives, compared with 52% who said it would lead to positive changes in 2020. Though the success stories of the defund movement are not always clear, the groups behind it say they helped move the needle forward in sparking conversations about city priorities and reimagining what public safety looks like. They hope the Trump administration's commitment to capital punishment and increasing law enforcement will inspire people to again envision alternatives to policing. 'If spending money on policing were an effective way to deter crime, then the United States would be the safest country on the planet that has ever existed and it is nowhere near that,' said Marcus Board, an associate professor of political science at Howard University. 'Meanwhile, healthcare suffers, childcare suffers, elder care suffers, public spaces are going away.' Instead of recognizing that people need a social safety net, he said, society punishes people for their hardships as if it's the key to transformation. But the punishment also robs people of their agency. 'That's a world that will constantly suffer unless people step up to do something,' Board said, 'which is why it's so important to remember the movement for Black lives'. In the spring of 2019, Devin Anderson was tabling on police reform in Metcalfe Park in Milwaukee when an older Black woman approached him. Anderson, the campaign and membership director of the non-profit African American Roundtable, showed her a pie chart that revealed that 46% of the city's general fund went toward the police department. Shocked by the figure, the woman told Anderson that she wanted to see more money spent on opportunities for youth, as she feared that boredom would drive her grandson to get into trouble that summer. 'That is a politicizing moment. Even if people do believe in police and policing, they don't think it should be getting that much money,' Anderson said. 'On a larger scale, what does it mean as a society when close to 50% of the money we spend has to go to police and policing, and it can't go to make real investments into things that people want to see?' Anderson and his team compiled the information that they gathered from tabling and listening sessions and formulated a list of community desires, including more youth programming, affordable housing and violence prevention. And then on Juneteenth that year, the African American Roundtable, which focuses on providing political education to the public, launched the campaign LiberateMKE to try to convince city leaders to divest $25m from the Milwaukee police department (MPD) and reinvest it in social programs instead. The campaign organizers attended budget hearings, spoke with city leaders about the need for reduced police spending and sent out email campaigns in which they encouraged residents to put pressure on their elected officials to invest more in social services. A few months later, the campaign was somewhat successful: in Milwaukee's 2020 adopted budget, the city diverted some $1.27m from the MPD to go toward housing and community services, and to increase the hourly wages for a summer jobs for youth program. Some of the diverted money also went toward affordable quality housing and a non-police violence prevention program, in which local residents were trained to de-escalate conflicts that had a high likelihood of resulting in shootings in their neighborhoods. In the city's 2021 adopted budget, there was also an approximately $2m reduction in police funding, which the city's comptroller, Bill Christianson, said reflected a smaller number of police officers, and that Anderson sees as a legacy of the group's advocacy work. Austin's promise to cut its police funding worked for some time. The 2021 police budget went from $434.5m to $292.9m and some of the funds were invested into housing, healthcare, family and mental health services. But city leaders reversed course and increased the police budget to $443m the following year. However, the impact from calls to invest in social services remains. After 2020, $6.5m that was diverted from the police budget went toward housing and services for unhoused people. Renovations for Bungalows at Century Park, an apartment community for the chronically unhoused that opened up last year, were included in that budget. The residents pay for their apartments with housing vouchers or payment assistance and are meant to stay in their units long term, possibly for five or 10 years, said the director of Austin's homeless strategy office, David Gray. 'To go from that into a safe, secure room where you can store your stuff safely, where you can sleep peacefully, and where you can meet with a case manager on site or get healthcare on site or job training on site, it's a night and day difference,' Gray said. While demands to invest in housing and services existed before Floyd's death, the calls to defund the police that followed helped push discussions forward. Budget trends in recent years show that city leaders have listened to the community's request for greater attention to the homelessness crisis. In Austin's most recent point-in-time count of unhoused people from January, volunteers and providers recorded 1,577 unsheltered and 1,661 sheltered people – the first time that the count showed more people sheltered than unsheltered. In the past five years, the city's homelessness services appropriations have increased from $39.7m in 2020 to a proposed $118.1m in 2025. According to the city's financial services data from 2024, the proportion of funding for homeless services that comes from the city's operating budget has increased, from 49.7% in the 2023 fiscal year to 57.5% in the 2025 fiscal year. 'In the wake of Black Lives Matter protests this summer, we made a significant cut to policing dollars and reinvested that in things like this,' Austin city councilmember Gregorio Casar told the Appeal in 2021. 'That's the only reason we're able to do this.' Black and brown-led groups such as the policy organizing non-profit King County Equity Now and the Decriminalize Seattle coalition called on Seattle officials to establish a non-police crisis response unit. They presented the Seattle city council with a blueprint on how to divest from the police and reallocate funding to alternatives to law enforcement. Organizers also called for a participatory budgeting process, in which the public would envision how to spend some of the city's budget. And Seattle leaders listened to some of their demands: some $10.2m was diverted from the city's police department to fund the participatory budgeting process's overall $28.3m reserve in Seattle's 2021 adopted budget. Representatives from Seattle's office of civil rights said that the funding from the police department came from unfulfilled positions and that the money would have returned to the city's general fund if it were unused. City leaders also looked to cities such as Eugene, Oregon, that had successfully launched non-police crisis response units to envision a third public safety department for Seattle. Launched in 2023, Seattle's community-assisted response and engagement (Care) department is a 30-person unit consisting of 24 first responders who address calls throughout the city. Care operates 10 hours a day from noon until 10pm, with the top priority calls being for suicides and overdoses. In the last 16 months, Care has responded to more than 4,000 calls. The Seattle 911 dispatch was also transferred from the Seattle police department to the Care department. When Care's chief, Amy Barden, speaks to community members who have used the service, she said they relay to her that 'it's just a relief to feel like I can call 911, and get a different response' outside of the police. She knows that some health and social service providers avoid calling the police when their clients are experiencing mental health crises. 'They just don't think it's going to be useful in the circumstance, and that it can be stress inducing, no matter how skilled that officer is,' Barden said. 'So it's been a very popular movement across the board.' Still, Barden views Care, police and the fire departments as working together as a team, and added that she 'will not support divestment in the fire or police departments', she said. 'Relative to the 911 data, we desperately need more of everything.' In 2024, participants in the participatory budgeting process – originating from the Black Lives Matter movement – voted to fund the Care department with an additional $2m to increase the number of the team's behavioral and mental health specialists. The organizers that helped push the city to create a third department say that Seattle can serve as an example for the rest of the nation. 'It showcases the stronger need for us to always have these kinds of approaches to our work, particularly when we're talking about doing work that's supposed to benefit specific folks,' TraeAnna Holiday, the former media director of King County Equity Now, said. 'It's important for folks to be engaged and for them to have a vehicle that allows them to be involved when so many people are focused on survival.' The protesters who took to the streets in opposition to law enforcement violence in 2020 were a catalyst for action, but the movement was ultimately led by organizers who worked for years to create safer and healthier communities. The defund movement was sometimes demonized because there wasn't a unified talking point on what communities would invest in outside of policing, said Hiram Rivera, the executive director of the Community Resource Hub for Safety & Accountability, a non-profit that trains communities on the basics of organizing. During the mass protests, Rivera said: 'Traditional organizing wasn't happening at the community level; they weren't able to build strong enough campaigns to either win the divestments or to be able to withstand the blowback when the pendulum swung in the opposite direction.' Currently, Rivera said that the abolitionist movement is in a state of reflection on the past five years and assessing what they have the capacity to build, particularly given the federal attacks on non-profit organizations. Rivera said that state bills have also made it challenging to divert funding from police departments since 2020. In May 2021, the Texas governor, Greg Abbott, signed a law penalizing cities for defunding their police budgets. And in Milwaukee, the African American Roundtable plans to end its LiberateMKE campaign over the next year due to an increasingly inhospitable landscape for defunding the police, Anderson said. A 2023 state funding law called Act 12 allowed Milwaukee to implement a 2% sales tax and jurisdictions are provided with additional state aid for law enforcement and fire protection, among other departments. But the city will lose part of its state funding if it does not maintain its number of police officers at the same amount as the previous year. In light of the Trump administration's recent executive order on 'strengthening and unleashing America's law enforcement', the Advancement Project's deputy executive director, Carmen Daugherty, said she is hopeful that the public will demand community-based solutions. A 26-year-old civil rights organization that focuses on movement lawyering, the Advancement Project has helped grassroots groups pressure their cities to invest more in social services by analyzing city budgets, creating surveys and white papers, and launching campaigns. 'This administration is saying we need more policing, more military grade-style weapons in our communities to make us safe,' Daugherty said. 'Once again, we'll hopefully see that upswing and recognition in the spotlight on what these community groups have been saying since pre-2020, but really galvanized in 2020, that there's more we can do. There's smarter solutions to public safety.' For organizers in the Black-led Movement for Black Lives (M4BL) coalition, they seek to dispel what they consider a false narrative that the rallying call around invest-divest didn't work. The defund movement helped catapult the model from the advocacy space into the national dialogue, said M4BL's interim senior director of communications, Chelsea Fuller. Every day for the past five years, she said an article about defunding has been published, or a politician has debated its merits. 'These types of changes in our communities very rarely happen overnight,' Fuller said. Movements take several years, or decades to accomplish significant change. 'It's not over. Five years in the legacy of movement work and liberatory work is a blip on the radar.'
