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Interim Adjustment Policy in the CACM
Published online by Cambridge University Press: 02 January 2018
Extract
The long-term revenue and balance of payments policies of the Central American Common Market (CACM) countries are (1) to achieve harmonization of their tax structures and improve tax administration; and (2) to establish a Central American Monetary Union capable of (a) assisting member countries suffering from temporary balance of payments disequilibria; (b) operating as a Federal Reserve Banktype system; and (c) serving as a clearinghouse for intra-CACM as well as external payments. These policies have been receiving considerable study. On 25 February 1964 the central banks of the five CACM countries signed in San Salvador an Agreement for the Establishment of a Central American Monetary Union. The foregoing policies were enunciated at a meeting of the Central American presidents in San José, Costa Rica, on 19 March 1963, when they agreed “to establish a monetary union and a common policy in fiscal, economic and social matters, within the framework of the Economic Integration Program.” A Central American Monetary Council was created by the Agreement. The Council comprises the presidents of the five central banks of the CACM countries.
- Type
- Research Article
- Information
- Journal of Interamerican Studies and World Affairs , Volume 13 , Issue 2 , April 1971 , pp. 182 - 196
- Copyright
- Copyright © University of Miami 1971
References
1 Twenty-fourth Extraordinary Meeting.
2 Established by an agreement signed by the Central American central banks on 28 July 1961.
3 Central Banks’ gold and foreign currency subscription to other international institutions are excluded by this definition, but are included in the concept of “foreign assets.”
4 This statement allows for a shift in the composition of imports toward more capital goods imports and an equivalent reduction in the value of “nonessential” consumer goods imports. However, imports of nonessential goods must take place to provide rewards for entrepreneurial effort. The question is to what extent can these imports be reduced without an adverse effect on local investment?
5 Inter-American Committee of the Alliance for Progress (Comité Inter-Americano Pro Alianza para el Progreso—CIAP).
6 For imported items that have not had uniform Central American tariff rates established, the surcharge also was to be 30%. However, the contracting parties could impose higher surcharges on such items in accordance with their respective laws, or lower surcharges to equalize the total levy with that of any CACM country having a lower tariff duty on such an item.
7 The surcharge was to be levied on the duties that such enterprises would have to pay if they did not have concessionary privileges.
8 However, the duties on all types of machinery are relatively low, so that the degree of discrimination would be slight.
9 The effects of possible consumption taxes are not included in this calculation, as these taxes would apply to a limited number of items, not important in relation to total imports.
10 Government imports and private imports entering duty-free under exonerations permitted by the Protocol. Estimated at 15% of imports from third countries.
11 Investigations undertaken in 1968 on behalf of the Central American Bank for Economic Integration, and in early 1969 on behalf of the U.S.A.I.D. Regional Office for Central America and Panama (ROCAP).
12 Heller, Jack and Kauffman, Kenneth M., Tax Incentives for Industry in Less Developed Countries (Cambridge, Ma.: The Law School of Harvard University, 1963), p. 194 Google Scholar.
13 Ibid.