AN OPEN letter from 85 leading global economists on Wednesday endorsed a proposed tax justice law in Honduras.

In a letter co-ordinated by Progressive International, the economists argue that the Honduran government’s proposed reforms would be “critical for reducing inequality in Honduras, supporting social and economic development and closing pervasive tax loopholes that undermine tax revenues.”

The letter is published as the Tax Justice Law will be debated in the Honduran Congress’s plenary session in coming days, following a successful passage through a special commission.

The signatories to the letter include significant figures in the economics profession such as award-winning Indian development economist Jayati Ghosh, Nobel prize for economics winner Joseph Stiglitz, US economist Jeffrey Sachs, Greek economist and former finance minister Yanis Varoufakis and British economist Ann Pettifor.

Honduras has long struggled to raise tax revenues from corporations and wealthy individuals, especially following a series of exemptions and loopholes created by successive post-2009 coup governments. 

These loopholes, coupled with banking secrecy and opaque systems of masking beneficial ownership, placed Honduras on the path to being labelled a tax haven by the OECD.

It is estimated that the value lost to the treasury from tax exemptions and loopholes between 2010 and 2023 is $20.1 billion (£15.5 billion).

The new law includes measures to ensure those with more should pay more, closes tax loopholes that permitted large-scale corporate tax avoidance, taxes corporate and individual income received from abroad, ends banking secrecy for tax matters, makes beneficial owners of corporations liable for taxation and ratifies the OECD’s convention on Mutual Administrative Assistance in Tax Matters.

The economists argue that the law “strikes a blow against the global tax haven regime and banking secrecy industry, setting an example to other countries whose tax jurisdictions are currently used to undermine the tax takes of other states through facilitating tax dodging.”