
A new 3.5% tax on remittances passed by the U.S. House of Representatives is sparking global concern, as critics warn it will disproportionately burden poor migrant families and fuel informal money transfer systems.
Part of a sweeping immigration and border enforcement bill championed by President Donald Trump, the tax applies to all international money transfers made by non-U.S. citizens. With remittances totaling over $656 billion globally in 2023 — $92 billion to Africa alone in 2024 — the consequences could be severe. “It is essentially a tax on the very poor,” said Andrew Selee, president of the Migration Policy Institute in Washington, D.C. The tax could lead to a 5.6% drop in remittances, according to a new study by the Washington-based Center for Global Development, with countries like El Salvador, Liberia, and The Gambia hardest hit.
Migrants may increasingly turn to cryptocurrencies, mules, or informal cash systems to bypass the levy — routes more prone to fraud and lacking consumer protections. “You’re taking money out of people’s pockets,” said economist Monica de Bolle, noting many remittance senders are low-income workers supporting even poorer relatives abroad. In Africa, where remittances now exceed both aid and foreign investment, the implications are stark. “This is going to have a huge impact on African economies,” said Ghanaian economist Enoch Aikins. He stresses that these funds are lifelines used to pay for “household expenses, things like food, accommodation, school fees or to cover medical expenses.” While supporters argue the measure will deter illegal migration, data suggests it may have the opposite effect — pushing desperate families, not least in Africa, further into economic hardship and driving irregular migration instead.