Tuesday 7 February 2023

Government would subsidize bus drivers to avoid increases in fares

Minister of Finance explains the plan would start with passenger data contained in Aresep

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7 February 2023 - At The Banks - BCCR

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QCOSTARICA – The Government of Rodrigo Chaves is considering subsidizing bus operators to prevent fares from becoming prohibitive due to the increase in fuel prices.

This was confirmed this Tuesday in the Legislative Assembly by the Minister of Finance (Treasury), Nogui Acosta, who detailed the subsidy mechanism of the Executive Branch to take advantage of a US$200 million loan provided by the Central American Bank for Economic Integration (CABEI), in order to mitigate the increase in fuels.

The Minister of Finance, Nogui Acosta, explained that it is very difficult to transfer the subsidy for the high cost of fuel directly to bus passengers. Photo Adrian Soto

“The idea is to create a mechanism through which, in the face of increases in transportation costs, we can generate a payment that would be made based on the number of passengers that are transported by bus companies,” explained the minister.

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Acosta explained that the subsidy cannot be transferred directly to people. Therefore, the idea is to subsidize the bus operators/drivers so that they not raise fares, “in the event that there are greater increases (in fuel), so that the rates that users pay today are not affected.”

When President Rodrigo Chaves included this subsidy proposal as one of the mechanisms to alleviate the impact of the cost of fuel, he made it conditional on the implementation of electronic collection by the bus companies.

On May 25, the Minister of the Presidency, Natalia Díaz, reported that the subsidy for bus drivers is being evaluated “almost as a last option.”

On Tuesday, the Finance Minister indicated that, initially, electronic payment, which is still a pilot plan, would not be required.  Instead, the subsidy would depend on the data that the bus companies deliver to the public services regulatory authority on the number of passengers they serve.

“After the implementation of the electronic payment, it would be mandatory to receive a subsidy, the data generated by the electronic payment system would be applied,” he commented.

“We are not raising it yet; it is the design of a mechanism that, in the event that prices become prohibitive, we would use,” he concluded.

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As proposed by the Treasury, the subsidy proposal does not have to be reported to CABEI for the approval of said mechanism, since it is a “broad loan that is intended to help countries mitigate the increase in the costs of fuels”.

In the Legislative Assembly, however, opposition fractions continue to favor reducing the single tax on fuels, as stated by Partido Liberacion Nacional (PLN), the party with the largest caucus with 19 of the 57 seats, and the Partido Unidad Social Cristiana (PUSC) with 9.

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