Making tortillas in the mercado central de Heredia. Photo from
Making tortillas in the mercado central de Heredia. Photo from

QCOSTARICA – Experts warn that the draft law which aims to raise income tax and convert sales tax into Value Added Tax (VAT) might not be approved for two years, despite the government’s intention to have it place before the end of this year.

The lack of consensus between the Ministry of Finance (Ministerio de Hacienda) and the President Luis Guillermo Solis is sending mixed signals on some aspects of the tax reform.  One example in the case of corporation tax, an issue that the President himself has stated he disagrees with.

In the opinion of economist Thelmo Vargas, it denotes that “… There is no agreement on the proposal”. Added to this is a fragmented legislative assembly where the ruling party does not have a majority.

The economist Vargas told that “… While we know that there has been better management of expenditure in recent months, problems remain with the triggers: wages, pensions and transfers, and debt servicing, whose amounts have continued to grow and because of this we are not in agreement with having new taxes until those decisions have been taken.”

He added that “… ‘I think there is a lot of opposition from political parties over approval of new taxes, because there is no plan to control spending. This will involve a lengthy discussion and we see no approval within two years’. ”


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