Tax on remittances is a tax on humanity

A controversial bill advancing through the US Congress threatens to impose a 5 per cent tax on remittances sent abroad by non-citizens.

This move could destabilise countless households across the Global South.

This newspaper on Wednesday reported that if passed, this measure would not only hurt migrant workers and their families, but also risk pushing money transfers underground, with grave consequences for development and financial transparency.

The so-called “One Big Beautiful Bill Act”, championed by hardline conservatives and originally proposed by former President Donald Trump, purports to strengthen border security and generate additional revenue. Yet its most contentious feature — taxing the modest earnings sent home by migrant workers — smacks less of fiscal prudence than of political scapegoating.

Remittances are not luxury transfers. They are lifelines. In countries like Bangladesh, India, and across Latin America and Africa, these funds pay for education, healthcare, housing, and food. For families with loved ones abroad, they are a vital economic pillar.

In March alone, Bangladesh received a record $546 million in remittances from the US. Imposing a tax on such transfers is akin to taxing compassion.

Furthermore, the administrative burden on banks and money transfer providers, responsible for collecting and remitting the tax, introduces complexity and cost into a system already fraught with barriers. Exempting US citizens while taxing only non-citizens smacks of discriminatory policy design, one likely to deepen social divides and foster resentment.

There is also a risk of unintended economic fallout. As experts and former central bankers warn, such a tax could drive remittances into informal, unregulated systems like Hundi. Not only would this erode official foreign currency reserves in developing countries, but it would also undermine anti-money laundering safeguards, making the global financial system less secure, not more.

Supporters argue this tax will deter illegal immigration. But the evidence suggests otherwise. Penalising those who play by the rules, pay taxes, and contribute to the economy will only alienate migrant communities and weaken bilateral ties.

At a time when the world should be seeking solidarity and fairness, particularly in global labour mobility and development, the US risks sending the wrong message.

Congress must reject this short-sighted bill. In taxing remittances, it taxes the very spirit of support and sacrifice that migrant workers embody. And that is a price far too high.