BTN News: El Salvador’s Legislative Assembly, led by the ruling party, approved a new law on Wednesday. This law removes tariffs on 160 essential goods for ten years. President Nayib Bukele suggested this plan to help lower the cost of living. The Assembly supported it with 59 out of 60 deputies voting in favor.
Key Points of the New Tariff Removal Law for Basic Goods
The “Special Law to Promote Competitiveness and Facilitate Access to an Expanded Basket of Basic Goods” includes many food items. These items are staple grains, vegetables, meats, and dairy products. Norma Lobo, a deputy from the Nuevas Ideas party, said, “This law will make sure people have food and that there is enough for everyone.”
Challenges for El Salvador and President Bukele After New Tariff Removal Law
President Bukele, starting his second term, faces pressure to reduce basic goods’ high costs. The conservative Alianza Republicana Nacionalista (Arena) party supported the law, saying it is a good step. However, Arena’s deputy Marcela Villatoro noted the impact might be small. Many products in the law already have no tariffs due to Free Trade Agreements (FTAs) in Central America. Villatoro suggested reducing the 13% Value-Added Tax (VAT) to lower prices further. This idea has not yet been accepted by the Assembly.
Government’s Plan to Lower Food Costs with New Markets and Distribution Centers
Bukele’s government has set up 30 agro-markets across the country. These markets help sellers and buyers meet, offering quality products at lower prices than other markets. But Bukele said this effort is not enough, calling it “very small.”
To make a bigger impact, Bukele announced new wholesale centers. These centers will sell fruits, vegetables, and other goods in large amounts. Private companies will run these centers. Bukele said they are already being built and will start soon. This will help keep prices fair.
Long-Term Plan for Keeping Prices Down with New Wholesale Distribution Centers
Bukele believes these wholesale centers will keep prices low for a long time. He said that once these centers are ready, the agro-markets will close slowly. “This will keep prices low, give people better food, and help local producers earn more,” Bukele said.
Helping Local Farmers Compete with International Suppliers with No Tariffs on Farm Supplies
The government also removed tariffs on animal feed, fertilizers, insecticides, and herbicides. This helps local farmers compete with international suppliers who might come to El Salvador because of the tax breaks. By lowering production costs, local farmers can offer better prices.
Conclusion
El Salvador’s new law to remove tariffs on basic goods is a big step to lower living costs and improve food security. There are still challenges, like trade agreements and the need for tax reforms. But the government’s plan, including the new wholesale centers, offers hope for a more affordable future for Salvadorans.
