Imposing a 5 percent tax on cross-border remittances to fund border barriers — as envisioned in H.R. 85, the Fund and Complete the Border Wall Act — could have adverse consequences for law enforcement and consumers, a coalition of trade groups including the American Bankers Association said today.
“As a matter of principle, taxes on consumer financial products and services are bad policy, no matter what the stated goal,” said the coalition, which represented banks and money transmitters. “The consumer tax in H.R. 85 would increase the cost of remittance transfers, driving consumers out of regulated financial services and forcing these money flows underground.”
The groups also noted that when consumers use regulated financial institutions and money services businesses to transfer funds, law enforcement and regulators are notified about suspicious and possibly illegal activities. “Policies that encourage alternative channels reduce transparency and the ability to properly monitor transactions,” they said.