(qCOSTARICA) The approval of the law changing the taxation of motels is expected to generate between ¢800 and ¢900 million colones in tax revenue, that will be administered by the  Instituto Mixto de Ayuda Social (IMAS), for programs to support the needy, children and housing.

The bill, that was approved Tuesday in first reading, changes the income tax paid by motel operators from one based on monthly profit to a flat tax rate based on the number of rooms

The change also affects strip clubs (called night clubs or “nights” in Costa Rica) and massage parlours (with or without a happy ending), among others.

Under the bill, if approved in second and final debate, motels are divided into three categories: A, establishments with more than 100 rooms; B, from 50 to 100 rooms; and C, less than 50 rooms.

The tax for category A motels the tax is equivalent to 13% of the income of a clerk fo the Judiciary (currently around ¢400.000 colones monthly); in category B, the tax rate is 10%; and in category C, 5% per month.

Under this formula, a category A motel would pay a tax of ¢52.000 colones, per room, per month. B motels ¢40.000, and C motels ¢20.000.

The use of a percentage based on a minimum particular public sector salary is a popular use of lawmakers, taking advantage of twice year increases in wages.

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