Saturday 30 September 2023

Goverment’s proposed reduction of Marchamo differs significantly from the stance of the opposition

Government plan increases Marchamo for luxury cars and allows a decrease for the rest of the vehicles, but legislators oppose

Paying the bills


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30 September 2023 - At The Banks - Source: BCCR

Paying the bills


QCOSTAIRCA — The discussion concerning the decrease of the 2024 Marchamo is ongoing, with the government’s plan and that of the opposition legislators being quite different, and the time to the end of the allotted period rapidly passing.

On the one hand, legislators consider that “the extraordinary” tax collection allows to bring economic relief to Costa Ricans and therefore, they promote a bill that would allow the property tax on vehicles reduced in the range between 20% and 62 %.

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This initiative was already ruled in commission and has the necessary votes in plenary to be approved.

Meanwhile, the government is cautioning of the financial impact that this decision could have, as it is estimated to create a deficit of around ¢118 billion colones and the reason for presenting an alternative proposal.

These are the 3 big differences between the two:

1. The amount: The main component of the Marchamo is related to the property tax on vehicles, some 67% of the total cost of the annual circulation permit.

In that sense, the reduction proposed by the legislators is almost double what the government offers. For example, a car with a fiscal (tax) value of ¢3 million would pay for ¢26,000 colones in property tax, while the government proposes about ¢67,000.

In the event that it is a vehicle with a fiscal value of more than ¢10 million, the difference would be greater: legislators propose a payment of ¢144,000 and the government ¢265,000

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2. Luxury cars: In this case, the government does not propose a reduction for luxury cars and therefore, owners of vehicles with a fiscal value of over ¢22 million colones will have to pay an increase.

The plan by legislators applies discounts for 100% of the vehicular fleet, that is all vehicles, and progressively, that is, the more expensive the car is, the less reduction percentage.

3. The fiscal impact: Nogui Acosta, Minister of Finance, estimated that the proposal of the legislators would open a fiscal hole of ¢118 billion colones, which would complicate the maintenance of national roads and investment in other areas such as security and education.

However, Eli Feinzaig, the head of the Progressive Liberal Party (PLP) faction, the party spearheading the legislative proposal said that the impact for fiscal collection would be only ¢50 billion colones.

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It is worth noting that Acosta and Feinzaig both have backgrounds in economics, which often leads to differing perspectives between them. It is said that so that where there are two economists, there are three opinions.

Katherine Brown, the legislator for the Partido Liberacion Nacional (PLN), the party with the greater number of legislative seats, commented that “Reality tells us that the Marchamo in Costa Rica is very expensive in relation to the rest of the region, and what is worse, is based on a tax that is incidentally not used for road maintenance as it should be”.

The deadline for legislative approval and signing of the approved bill by the President and its official publication in the National Gazette is before October 5, allowing time for the Ministry of Finance and the Instituto Nacional de Seguros (INS), the state agency in charge of collection, to make the changes to the system, for the start of collection on November 1.

The Marchamo applying to the following year must be paid by December 31 of the current year, failing drivers of vehicles without the current Marchamo face a traffic fine and/or confiscation of the vehicle, along with accrued interest and penalties for late payment.


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Paying the bills
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"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.

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