Guatemala Ousts Finance Chief, Abandons Planned New Taxes

Guatemala’s military leader fired his finance minister Friday and gave up plans for new taxes that had provoked both panic buying and rumors of a coup.

Gen. Oscar Mejia Victores said he dropped the plan for sales and import taxes “to avoid a greater conflict and not affect the majority of Guatemalans.”

He announced the dismissal of Finance Minister Leonardo Figueroa Villate, who had served since March, 1982, but did not name a replacement.

After Mejia said Thursday that the new taxes would be imposed despite protests, thousands of shoppers filled the stores to stock up, and coup rumors circulated around the country.

The tax plan called for a 15% levy on all products imported from other Central American countries, 50% on other imported goods and sales taxes on nearly everything. There also were some specialized business taxes. Among items affected by an import tax would be vehicles, clothing and many food items.

Mejia’s intent was to reduce the volume of imports and stem the flow of capital from the country at a time of recession.

The general also announced Friday that he is calling off a trip to the Vatican, Israel and Egypt that was scheduled to begin Sunday, apparently because of the public discontent.