El Salvador’s President Nayib Bukele has announced his intent to file extortion charges against municipal governments that fail to reverse recent tax increases on business operating licenses. The president condemned the drastic rise in fees, citing instances where costs have surged from $100 to $3,000, calling such hikes unjustifiable and labeling them as a form of extortion.
Bukele issued a direct ultimatum to municipal councils across the country, demanding that all fees, licenses, and permits be restored to the amounts charged before the current municipal administrations took office on May 1. He warned that any municipality refusing to comply would be reported to the Attorney General’s Office (FGR) for extortion.
The president’s warning followed reports of abusive fee increases in multiple municipalities, including an instance in Ahuachapán, where a $200 fee was imposed on telephone vendors. Additionally, some municipalities have introduced charges on businesses for displaying signs on their products. Bukele stressed that such financial burdens contradict his administration’s efforts to promote economic growth and job creation.
According to reports, certain municipal tax hikes have exceeded 200%, forcing many businesses to forgo license renewals, leading to closures and job losses. President Bukele estimated that around 15,000 businesses have shut down as a result, potentially displacing approximately 45,000 workers.
“We are working to revive the economy of a country that has been in the dark for decades. We will not allow bureaucrats to unfairly burden our micro, small, and medium-sized entrepreneurs, ultimately closing businesses that are a fundamental pillar of our economy,” Bukele stated.
His remarks, first shared on his X account and later reaffirmed at a public event, prompted immediate responses from mayors across the country. Some local leaders, including Marcela Pineda of La Paz Este and Jorge Castro of Santa Ana Oeste, expressed their willingness to align with the government’s economic vision. Pineda’s administration, for example, reduced operating license fees to $1 for micro and small businesses.
As Bukele’s deadline for reversing the tax hikes looms, the controversy over municipal business fees continues to unfold, with local governments now under intense scrutiny from both the administration and the business community.
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