September
2004
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September
2004
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| Survival of local Honduran businesses threatened |
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For over 30 years, Maritza Berlioz, owner of Burger Hut,
has had to fight to keep her hamburger business a float. In the beginning
she owned five locations dispersed throughout the city, now she is left
with only one. She is upset with how the laws have been created, giving
incentive to only large foreign companies to invest in Honduras, in the
hope that it will generate tourism. Maritza believes that the laws only
benefit privileged groups of already wealthy foreigners. |
(Photo of Maritza Berlioz to the left) |
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"Who will give us a tax break?," was one of the many questions raised by local business owners in an article that was published by the Daily Tribune in May 2003, addressing the gravity of this issue through which a series of declarations were presented to the government for taking from small Honduran business owners the right to receive benefits that the Tourist Incentive Law provides international companies. The Tourist Incentive Law was published April 23, 1999, establishing tax exemption for international business the first 10 years after being established, including foreign fast-food chains. For Maritza, "This is unfair competition. It will only accelerate bankruptcy among small businesses. We are punished simply for existing before the new law was written and have to pay all sorts of taxes." Maritza has fought for many years in order to receive some of the benefits that the law authorizes small business, but it has been a frustrating battle for Martiza as well as for other Honduran small business owners. Their efforts have not led to the concrete results they had hoped for. |
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"Honduran businesses have always had a lot of problems because the laws seem to have been designed for only certain people. It is possible to receive benefits but only when one is able to invest a large amount of money in fees," said a local fast-food owner to REVISTAZO.COM, who asked to not have his name mentioned. |
| Local business
owners say that is has been, and continues to be, difficult to compete with
the larger companies who are able to offer low prices to their customers
because they do not have to worry about including money for what they would
have to pay out to the Honduran government.
"I can´t criticize the law because Honduras needs incentives to
attract tourism. However, I believe that if laws are created to benefit
large international companies that bring their businesses down here, there
should also be complementary laws created to benefit those that already
exist here. There shouldn´t be discrimination between different
types of ownership," says a local owner. INTUR is one of the many
companies included in this list of businesses that are exempt from paying
taxes. Despite the millions of dollars that they avoid paying the State
in taxes, the owners of INTUR still have not wanted to pay the $26,086,81,
that would be shared among the 27 fired employees, that the company owes
in compensation according to the law established. |
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How was the law established? After Honduras was economically devastated in 1998 by Hurricane Mitch, there was a great need for a strategic plan of action for economic recovery in the country. The National Congress of Honduras decided that one of the best ways to create such a recovery would be to stimulate international investments. With this idea in mind, the Tourist Incentive Law was passed, in order to generate tourist spending in the country. Many already existing companies, knowing the benefits offered them by the new law, opted to open new locations in order to cash in on the large tax exemption. "Fast-food businesses are seen by the government as tourism projects, when in reality they are just businesses. All they sell is food," says Daniel Bustillo, a lawyer that worked years ago for a firm that was in charge of carrying out the procedures necessary in order that businesses were able to receive benefits authorized by the Law. "These benefits are not given to small business owners to help them start up because they do not meet certain requirements, being that there had to be studies done by the company, plans and proposals made, etc. All this costs a lot of money to make happen and small business are not equipped to handle those kind of expenses," says Bustillo. Fast-food chains now taken out of the law Many local business owners, who were never able to obtain government have suffered greatly. Some went bankrupt and others decided to sell their businesses after seeing that they had no support from anyone in their fight to receive equal benefits. Although she did not specify whether or not she was for the fight of small business owners, Claudia Moir, legal representative for the Honduran Institute of Tourism, assured REVISTAZO.COM that the excessive benefits received by these businesses was the main motive for determining to take fast-food chains out of the Tourist Incentive Law. Franchises that before did not have to pay taxes to the State will now
have to under this new stipulation of the law. Nevertheless, some businesses
believe that now it is too late since these international companies have
already been granted by law the benefit of remaining tax-free for the
first 10 years of business. Local owners believe that this is enough time
to cause all small businesses to go bankrupt. |
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