Bill proposes new fees for international wire transfers

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(The Center Square) – Pennsylvania could be the second state in the nation to pass legislation that would generate revenue by imposing a fee on international wire transfers sent by undocumented immigrants back to relatives and friends in their home countries.

Senators Doug Mastriano, R-Chambersburg, and Chris Gebhard, R-Lebanon, said they will introduce a bill meant to deter illegal immigration while creating significant revenue for the state’s Property Tax/Rent Rebate program.

“Illegal immigrants hurt Pennsylvania’s economy by sending money out of the United States and back to their country of origin,” Mastriano said in a press release. “This fee would ensure some of that money is used to provide property tax relief rather than going to support the economy of a foreign nation.”

The lawmakers’ bill is modeled after a similar one enacted in Oklahoma in 2017 – the only state with such a law to date.

Oklahoma’s 2023 Tax Commission Report shows the one percent fee they impose generated $12.3 million, which is used to fund resources supporting the state’s efforts in combatting drug-related crimes.

Mastriano said Pennsylvania’s estimated undocumented immigrant population is greater than Oklahoma’s, so the revenue created from his proposed 10% fee would result in even greater annual revenue.

A recent report by FAIR – the Federation for American Immigration Reform – says that of the estimated 16.8 million undocumented immigrants living in the U.S., there are 147,000 in Oklahoma and 272,000 in Pennsylvania.

Gebhard notes the process is also used in criminal activity.

“While we provide property tax relief, we can also discourage money transfers out of Pennsylvania that could go to support cartels that send dangerous drugs to our communities and perpetuate human trafficking – both disgusting ways to take advantage of other humans,” Gebhard said.

In a 2021 report to Congress, the Government Accountability Office, or GAO, cautioned that wire transfers continue to be used by transnational criminal organizations and terrorist groups to launder money from drug and human trafficking and other criminal activity.

Estimates are that 7.5% of the remittances sent to Mexico in 2023 – totaling over $63 billion – can be linked to organized crime.

The remittances have become a source of stable income for Mexico as well. The Federal Reserve Bank of Dallas says remittances are Mexico’s main net foreign-exchange generator, ahead of both manufacturing exports and tourism. The amount sent in 2022 was equivalent to 4.5% of Mexico’s GDP.

“We’ve seen this concept has been successful in Oklahoma by preventing millions of dollars from escaping the state economy,” Mastriano said. “This is a commonsense proposal to deter illegal immigrants from draining money out of Pennsylvania’s economy.”