The Editor, Amandala
Tuesday, July 15, 2025
Dear Editor,
As I listened keenly to the esteemed economist, Dr. Victor Bulmer-Thomas, during his recent lecture on “Belize’s Economy in the 21st Century” at the UB Policy Research Institute conference, Belmopan, several pressing questions and thought-provoking suggestions echoed across the room. Why is Belize performing so poorly compared to its regional counterparts? How can Belize narrow the persistent trade deficit, expand real GDP and achieve a higher score on the Gini Coefficient to secure a higher standard of living for Belizeans?
While ideas ranged from boosting domestic productivity to diversifying trade, one theme left a firm impression on my mind. A theme that is both urgent and fundamental: Belize’s broken tax system is a major obstacle to economic growth.
It is estimated that hundreds of millions of dollars in potential tax revenue are lost each year due to various forms of tax holidays, loopholes, inefficient collection systems, and outright evasion. Much of this isn’t just a bureaucratic oversight; it’s a systemic flaw with profound implications for the country’s ability to fund public services, invest in infrastructure, and stimulate economic activity.
According to a study by the Inter-American Development Bank (IDB), many Caribbean nations lose substantial portions of GDP each year to tax exemptions and inefficiencies. Belize is no exception. Generous tax holidays to select investors and foreign entities, often under the banner of economic development, end up benefiting a few. This creates economic leakage, as money often leaves our shores and is sent abroad to wealthier countries, while robbing the wider economy of necessary revenue.
Economist Thomas Piketty’s work on inequality emphasizes the importance of progressive and effective taxation systems in ensuring equitable and sustainable economic growth. Belize, in contrast, finds itself trapped in a regressive cycle by under-taxing the wealthy and powerful, while over-relying on consumption taxes like GST, which impact the poor and working class the hardest.
When tax systems are weak, the state lacks the resources to provide quality public services, resulting in weak institutions, poor education outcomes, unreliable infrastructure, and discontented citizens. These conditions not only undermine productivity and investor confidence, but also worsen income inequality and brain drain, as talented Belizeans seek opportunities elsewhere.
By closing loopholes and reforming tax exemptions, Belize could significantly expand its fiscal space. This would enable:
- Lowering of national debt.
- Reduction of trade imbalance, by enabling investment in productive sectors and export capacity.
- Effective and efficient funding for education, healthcare, and infrastructure, to enhance the long-term competitiveness of the economy.
- Job creation, particularly in industries with strong multiplier effects like construction, renewable energy, and agro-processing.
From a Keynesian economic perspective, increasing public sector investment during periods of sluggish growth can stimulate demand and result in broader economic expansion. However, this requires funding, which comes from revenue. Belize’s current inability to collect what is owed from entities profiting off the economy, is a roadblock to this growth strategy.
Furthermore, international financial institutions have consistently warned that countries with opaque tax regimes and weak enforcement mechanisms are more vulnerable to capital flight and underdevelopment.
To resolve this, Belize should:
- Conduct a comprehensive review of all tax exemptions and incentives to ensure they deliver a measurable return on investment.
- Invest in modern tax collection systems and enforcement capacity, including digitization and real-time reporting.
- Strengthen institutions like the Belize Tax Service Department, shielding them from political interference and providing them with adequate resources.
- Promote transparency and accountability, by also publishing tax expenditure reports and ensuring public oversight of large exemptions.
Tax reform is never politically easy; it never is. Our tax system is leaking, and unless we fix it, we cannot hope to build a robust and inclusive economy.
Instead of seeking to fund our institutions and projects through more debt or more aid, the government should look towards a fairer and more innovative system that ensures everyone contributes their fair share. Only then can we unlock the promise of sustained economic growth, reduce inequality, and create a future where Belizeans no longer ask why we lag behind, but marvel at how far we’ve come.
Sincerely,
Kahlil Enriquez