With only weeks to go of this current administration, Finance Minister, Édgar Ayales, is recommending a move to a “Value Added Tax” (VAT) and raising the tax rate, to address the country’s financial problem.

The 44 page document entitled “Cómo lograr la consolidación fiscal?: Recommendaciones para una hoja de ruta” (How to achieve fiscal consoliation, recommendations for a road map), the Chinchilla government’s plan would heal the country’s financial situation in five years.

Proposed is a cap on the decifit (2% of production in the long term), implement a global income tax, a single wage structure for new public sector employees, evaluate and streamline tax exemptions, and increase the tax on goods and services from the current 13%% to 15%.

The Ministry of Finance document warns of the looming problem is action is not taken.

Minister Ayales explained that if the financial problem is not corrected by 2019, the public debt will exceed 58% and the government’s deficit will be around 8% of production.

For this year, the current government is forecasting a 6% deficit of production and as of January last the government debt was 34%.

Ayales said that the proposal was presented to both – the Partido Accion Cuidadana (PAC) and Partido Liberacion Naional (PLN) – political parties in the election process that could form a new government in May.

Helio Fallas, vice-presidential candidate for the PAC, told the media that he would like to study the document before offering an opinion.

“What I can say that we will study it carefully and, based on the analysis, some measures could be considered in the next government,” Helio told La Nacion.

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