BD migrants warn of fallout from US remittance tax
NY Correspondent :
A controversial new bill in the United States could soon impose a 5 per cent tax on all remittances sent abroad by non-citizens, a move that is expected to significantly impact thousands of migrant workers, including those from Bangladesh.
The legislation – originally proposed by former President Donald Trump under the title “One Big Beautiful Bill Act” – narrowly passed the US Congressional Budget Committee on Sunday, 18 May, by a single vote and is now set to face a full Congressional vote.
The bill includes provisions for tax cuts, reductions in government spending, and enhanced border security. One of its most notable and contentious components is the imposition of a 5 per cent tax on all remittances sent from the US to foreign countries.
According to a report by NDTV, US banks and money transfer service providers would be responsible for collecting the tax and forwarding it to the government. If the tax is not paid at the point of transfer, the service provider would remain liable.
US citizens and individuals born in the country are exempt from the tax, though they must provide proof of citizenship and enter into a special agreement with the US Treasury. There are no exemptions based on the amount transferred, meaning even small remittances sent by non-citizens would be taxed.
India, which receives the highest share of remittances from the US, is expected to be the most affected. During the 2023-24 fiscal year, India received a record $118.7 billion in remittances, with 27.7 per cent originating from the US The majority of these funds came from Indian nationals working in the US on H-1B and L-1 visas-over 70 per cent of which were issued to Indian applicants last year.
Bangladesh is also poised to feel the effects. Since January, remittances from the US to Bangladesh have reached record levels. In March, Bangladesh received $546.13 million from the US – the highest monthly total on record. Hundreds of thousands of Bangladeshi-origin immigrants, many of them non-citizens, reside in the US and routinely send funds home to support families.
“If this tax is imposed, people like us will suffer the most – and so will our families back home,” said Abul Kalam, a Bangladeshi immigrant who has lived in New York for 15 years and works long hours at a restaurant in New Jersey. His monthly remittances fund his daughter’s education and cover healthcare expenses for his younger brother.
Development activist Rashida Akhtar from Bangladesh added, “Remittances are not just used for consumption – they fund housing, agriculture, and education. Taxing this essential support will destabilise entire communities.”
A former deputy director of Bangladesh Bank willing to unnamed warned that the tax could deter legal money transfers and push migrants towards illegal channels such as Hundi – an informal transfer system – posing risks to the country’s economic stability.
“Any move to reduce remittances ultimately harms the US itself,” said Manuel Orozco, Director of the Migration, Remittances, and Development Programme at the Inter-American Dialogue. “These funds are vital lifelines for families in impoverished communities. If these lifelines shrink, more people may feel compelled to cross the US border illegally.”
Supporters of the bill, however, argue that the measure could curb illegal immigration while generating much-needed revenue.
Mark Krikorian, Executive Director of the Center for Immigration Studies, stated, “People come to the US primarily to work and send money home. If that becomes more difficult, the incentive to migrate here will decrease.”
The proposed legislation has sparked mixed reactions from migrant communities and development experts alike. As the bill awaits a full Congressional vote, its economic and social implications are already reverberating far beyond US borders.