1. FONAT:
TAX, SOLIDARITY OR OBLIGATION?
May 2, 2013
On Thursday December 13, 2012, our legislators approved the Fund for Assistance of Victims of Transit Accidents Act, or
FONAT. This “tax” which comes into effect today seeks to raise funds for the following: assistance of victims of automobile acci-
dents, road safety education and the purchase of “scrap” (those public transportation buses with more than 20 years on the road.)
FONAT will be financed by a “special contribution” that Salvadorans will make when renewing their vehicle registration each year.
Some rates are: $35 for cars, $150 for buses, $45 for motorcycles and $140 for trucks. Foreign vehicles entering the country are
also required to pay FONAT.
Government communications and publicity regarding FONAT have defined it as “solidarity, compulsory and universal.”
LET’S TALK ABOUT “FONAT”
DOUBTS REGARDING FONAT...
DEFINING CONCEPTS!
Solidarity and contribution means adhering to a foreign cause and
supporting it. They are voluntary attitudes and do not depend on
the coercion of a third party.
FONAT is not a contribution, it is a tax: Its payment is mandatory
and there are consequences for failure of payment.
Dear State: Solidarity and Obligation are not the same thing!
Insurance Legislators? When voting for FONAT, Congress-
man Rigoberto Soto pointed out that the Legislative Assembly
is not an Insurance Legislative Body. Does Congress know how to
legislate the creation of an insurance policy? How do we make
sure the funds reach their proper destination in the best way
possible?
Who knows about Insurances? In El Salvador there are
corporations that provide insurance for individuals who have
the technical ´know-how´ to provide the service better than the
government. How do we find smart ways to improve access to
insurance policies? Can we promote competition rather than for-
cing individuals to finance this Fund?
FONAT to foreigners: Can FONAT become a negative incen-
tive for foreign visitors coming through terrestrial borders?
Instead of facilitating their arrival and stay, which provides addi-
tional benefits, aren´t we making visits more complicated?
Economic impact: FONAT not only raises the cost of parti-
cular drivers, which in some cases will see the Registration Fee
doubled. Additionally, the cost of transporting load increases, and
it is likely this increase will be translated into higher prices for so-
me goods and services. Can Salvadorans absorb these costs?
Destination of these funds: Finally, not all money raised
through the tax will be directed towards the assistance of vic-
tims. How sure it is that this fund achieves all the functions for
which it was created. If there isn´t sufficient evidence and techni-
cal research it should not be a Public Policy!
Which of the institutions involved will be accountable
and responsible for FONAT? Ministry of the Treasury, Minis-
try of Health, Ministry of Transportation…?
