While global remittances in 2017 grew by 7 percent over those sent in the previous year, money flows into Latin American and Caribbean nations grew at an even faster rate. At a rate of 8.7 percent greater than remittances sent in 2016, the amount of money flowing into the Latin American and Caribbean regions reached almost $80 billion in 2017.
Remittance growth rates in the United States stem from tighter U.S. immigration rule enforcement as “migrants remitted savings in anticipation of shorter stays in the United States,” according to a report from The World Bank.
“Remittance growth was robust in Mexico (6.6 percent), El Salvador (9.7 percent), Colombia (15 percent), Guatemala (14.3), Honduras (12 percent), and Nicaragua (10 percent).”
World Bank officials speculate that the uptick in remittances for the region will continue throughout 2018 with an expectation of growth at 4.3 percent to $83 billion.
One potential hiccup in the projected remittance growth pattern comes in the form of President Donald Trump’s proposal to tax money sent by migrants, according to Manuel Orozco in his Trump, Immigration Policy and the Fate of Latino Migrants in the United States report. Attributing “at least $130 billion” remitted by more than 35 million migrants each year, the president views a tax on the funds as a means of funding his proposed border wall. However, Orozco argues, tax implementation falls under Congressional purview. Any moves the president makes to unilaterally institute a tax is unlikely to hold up to scrutiny.
“President Trump may find an alternative to dealing with the U.S.-Mexico border beyond taxing remittances. At this point, however, what this may be remains unclear.”
On the chance that a tax on remittances does go into effect, the reality of the situation means the bulk of the burden would fall on the undocumented immigrant population, 80 percent of whom are from Central America and Mexico. The result would “adversely affect remittance recipient households who predominantly use formal financial institutions to send their money, while also driving remittances underground.”
In agreement that severe immigration policies stunt remittance growth, World Bank officials, say another constraint includes increased regulations on money transfer operators that are intended to reduce financial crime.