Tuesday 15 June 2021

IMF Suggests Costa Rica Slash Debt, Move To VAT

Lorenzo Figliuoli of the IMF (behind the microphones) sits at the table with the Ministro de Hacienda, Helio Fallas and the president of the Banco Central. Photo: CRHOY
Lorenzo Figliuoli of the IMF (behind the microphones) sits at the table with the Ministro de Hacienda, Helio Fallas, the president of the Banco Central and other government officials. Photo: CRHOY

COSTA RICA NEWS — Lorenzo Figluioli of the International Monetary Fund (IMF), in a visit to Costa Rica Monday, at a press conference, urged the Solis Administration to cut the debt by 4% . The debt is figured on the basis of the Gross Domestic Product (GDP).

The IMF wants to see the country reduce the shortfall between income and spending by converting the current sales tax into a Value Added Tax (VAT), and raise it two percentage points — one point during each of 2016 and 2017.

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This recommendation follows comments by the Solís government of replacing the current 13% sales tax on the purchase of goods to a 15% VAT applied to all goods and services.

The IMF has evidently given up for now its past urging of simply a sweeping tax reform to close loopholes and cutting spending. But the IMF didn’t stop there: Figluioli urged an overall income tax and raising that tax rate.

The current Legislative Assembly has shown little stomach for tax hikes and it seems unlikely that it will bite the bullet on this one. But IMF threw a bone to the Solis Administration by suggesting budget cuts of 2.5% by paying attention to curbing wages.

Those wage increments should not exceed real inflation figures and income should be 2.5% of the Domestic Product. But even with the prestige of the IMF behind the advice, politicians will still squeal like stuck pigs.

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The international monetary organization sees the world as it is, not through distorted political glasses. This reporter can remember decades ago when one politician screamed, “We’ve been IMF-ed!” rather than vote for sanity

With notes from: CRHoy.com,  iNews.co.cr

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We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

"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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