Friday 27 May 2022

Costa Rica Plans To Raise Tax Take, Cut Deficit

Paying the bills

Latest

CHEC will have eight more months to complete expansion of RUTA 32

QCOSTARICA - With fingers crossed, by February 2023, the...

Has Costa Rica reached the peak of the fifth wave due to Covid-19?

QCOSTARICA - Although the growth trend of diagnoses by...

Campaign against the seasonal influenza (flu) virus will start in June

QCOSTARICA - The Caja Costarricense de Seguro Social (CCSS)...

Is ¢700 colones to one dollar around the corner?

QCOSTARICA - The dollar exchange is expected to maintain...

Hospitalizations for covid-19 increased in the last week

QCOSTARICA - Covid-19 is still with us despite the...

Criminals prefer to steal cars with better gas mileage due to the increase in the price of gasoline

QCOSTARICA - As the country nears another record-setting increase...

UCR affirms that a strong intervention on the exchange rate is inconvenient

QCOSTARICA - The Institute for Research in Economic Sciences...

Dollar Exchange

¢676.88 Buy

¢682.74 small> Sell

27 May 2022 - At The Banks - BCCR

Paying the bills

Share

(Reuters) – Costa Rica’s government will submit to lawmakers in 2014 a fiscal reform bill to boost consumption taxes and cut the deficit as it seeks to tap global debt markets, the country’s finance minister said on Tuesday.

Presidenta Laura Chinchilla’s administration will ask lawmakers to scrap the country’s sales tax and replace it with a higher-rate value-added tax (VAT), Finance Minister Edgar Ayales said on Tuesday.

Ayales said the bill, which he thinks can be approved before Chinchilla’s term ends in May 2014, would seek to cut the country’s fiscal deficit from recent levels around 5 percent of gross domestic product to a 2 percent target by 2018.

- Advertisement -

“The objective is to reduce the deficit by three (percentage) points, but this cannot just be on the income side. It also has to have a spending component, which has not been in previous reforms,” Ayales said.

The bill would seek to replace the current 13 percent sales tax with a VAT tax of 14 percent to 15 percent, Ayales said.

Costa Rica, a coffee exporter and top tourist destination in Central America, has been trying to clean up its books as it plans to issue US$1 billion in Eurobonds in May or June.

With one of the highest fiscal deficits in Latin America, Costa Rica has had to go to international debt markets to finance spending, which has increased every year by about 10 percent over the last seven years.

A previous attempt to overhaul the tax code was killed last April, when a panel of judges in the Supreme Court ruled it was unconstitutional in a major blow to one of the Chinchilla administration’s top priorities.

“Costa Rica has never passed a fiscal reform as one package of measures and certainly nothing like Ayales is envisioning right now,” said Alberto Franco, who led the country’s central bank 20 years ago and has advised other administrations.

- Advertisement -

He says a new, higher VAT will be very unpopular. “It’s possible that it’s unnecessary to raise the rate if you broaden the base”, he added.

- Advertisement -
Paying the bills
Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

CHEC will have eight more months to complete expansion of RUTA 32

QCOSTARICA - With fingers crossed, by February 2023, the China Harbor...

Has Costa Rica reached the peak of the fifth wave due to Covid-19?

QCOSTARICA - Although the growth trend of diagnoses by Covid-19 indicates...

Subscribe to our stories

To be updated with all the latest news, offers and special announcements.