OPPOSITION STEALS IDEA FOR "15TH MONTH" OF SALARY

C O N F I D E N T I A L TEGUCIGALPA 000312

SIPDIS

E.O. 12958: DECL: 05/04/2019
TAGS: PGOV KDEM ELAB EFIN HO
SUBJECT: OPPOSITION STEALS IDEA FOR "15TH MONTH" OF SALARY
FROM ZELAYA

Classified By: Ambassador Hugo Llorens, reasons 1.4 (b & d)


1. (C) Summary: In an effort to preempt reported plans by
President Manuel "Mel" Zelaya to decree that all employers
pay their employees an additional month of salary (the 15th
month),Congress President Roberto Micheletti proposed a
similar bill on April 21. Micheletti's version exempted many
categories of workers and purportedly would allow employers
to deduct this expense from their income taxes. In response,
an angry Zelaya interrupted television and radio broadcasts
multiple times in the past few days and threatened to pass
constitutional amendments to dissolve both the Congress and
the Executive by following the model being pursued by
President Correa in Ecuador. End Summary.


2. (C) Following his successful imposition of an almost 60
percent minimum wage hike that bolstered his popularity with
the working classes and the poor, in recent weeks rumors have
abounded that President Manuel "Mel" Zelaya was planning to
issue a decree that all employers would have to pay an
additional month's salary (15th month) to employees. (Note:
Currently, in addition to their regular salaries, all
employees receive mandatory bonuses equivalent to a month of
salary in June and in December - the 13th and 14th month.
End note.) According to Embassy sources, both parties
believed that Zelaya would announce his decree on
International Labor Day (May 1) and rally huge masses in
support. In an effort to outmaneuver Zelaya and steal his
populist thunder, Congress President Roberto Micheletti
decided to propose his own version of the 15th month.
Micheletti,s bill exempts small and medium enterprises,
public sector employees, and several other categories of
workers from having to pay the extra salary. The Micheletti
bill would also allow employers to deduct the amount paid in
the 15th month from their taxes. (Comment: The executive
director of the Honduran Banking Association, who has
reviewed the bill, told us that in fact it treated the 15th
month of salary the same as all other wages and salaries in
terms of tax treatment. End Comment.) Micheletti also called
for the creation of a commission, which would study the bill
before issuing a report. He told us that this was a move to
diffuse the situation until after May 1.


3. (C) In response to Micheletti's action, Zelaya interrupted
television and radio broadcasts to rail against Micheletti's
measure. Zelaya criticized the idea of providing a tax
exemption for businesses, noting that it would result in a
revenue loss of 4 billion lempiras (approximately USD 212
million). Zelaya threatened that if the Executive and the
Congress could not come to an agreement on this issue, he
proposed that Honduras follow the Ecuadorian example and
institute a "Law of Crossed Death," which he explained would
entail dissolving of both the Executive and the Congress and
immediately calling for a constituent assembly. In response,
many in the media criticized Zelaya for needlessly
exacerbating political tensions by proposing such radical
measures.



4. (C) Comment: The recent political spat over the 15th
month highlights the growing political tensions in Honduras
driven by growing fears that Zelaya may be attempting to
subvert the constitutional order. As two of the major
players in this political drama, there is a growing enmity
between Zelaya and Micheletti resulting in a breakdown of
political dialogue and the emergence of open confrontation
between the leaders of the executive and legislative branches
of government. We will continue to encourage all sides to
seek to resolve their differences through dialogue and
underscore U.S. support for a legal, constitutional and
consensual solution.
End Comment.
LLORENS