Tuesday, 29 September 2020

Legislators Approve Plan Fiscal, President Signs Into Law

Legislators on Monday afternoon approved in second and final debate the Plan Fiscal – Ley de Fortalecimiento de las Finanzas Públicas – with the aim of alleviating the country’s fiscal deficit.

The Tax Reform bill was approved with the votes of 34 votes in favor and 17 against.

It was 5:44 pm when the final vote was taken, the government of Carlos Alvarado reaching its goal of getting the controversial tax plan approved with the support of 14 legislators of the Partido Liberación Nacional (PLN), 10 of the Partido Acción Ciudadana (PAC), 8 of the Partido Unidad Social Cristiana (PUSC), 1 from the Partido Integración Nacional (PIN) and the vote of independent Erick Rodríguez.

- paying the bills -

How they voted

The 17 votes against came from 3 legislators of the Partido Restauración Nacional (PRN), 2 of the PIN, 2 of the PLN, one each of the Partido Republicano Social Cristiano, Frente Amplio and PUSC.

Absent from the vote were three legislators from the PRN, one each of the PLN and Republicano.

The Legislative Assembly is made of 55 legislators.

- paying the bills -

This approval comes after two failed attempts by two previous governments.

With the tax reform, the Ministerio de Hacienda (Ministry of Finance) expects close to 2% of the Gross Domestic Product (GDP) – Producto Interno Bruto (PIB) in Spanish to alleviate the deficit that currently exceeds 7% of the GDP.

The tax reform also converts the current 13% sales tax on goods to a Value Added Tax (VAT) – Impuesto al Valor Agregado (IVA) in Spanish – with a rate of 13% on goods and services.

Likewise, it introduces several reforms made to income tax, such as the application of a global income, so that the taxpayers must pay taxes on the totality of their income and not separately. This change increases the total income tax paid by those with higher incomes.

In addition, the income tax is graduate to top off at 25% for earners over ¢4.205 million monthly. Earners of below ¢817,000 monthly do not pay income tax, the graduated to the maximum.

Other tax changes include a 15% tax on capital gains on real estate, stock, licenses, etc. The income tax on interest income will go from the current 8% to 15%. The VAT will tax streaming services such as Netflix and Uber, for example.

- paying the bills --

The VAT will also apply to housing rentals equal to 1.5 base salaries and higher. The current amount is ¢648,000 colones monthly.

The tax reform also introduces a number of amendments to the public sector salaries, containing government spending on bonuses, while limiting severance to a maximum of eight years.

The final chapter of the initiative establishes a series of fiscal responsibility rules for government authorities, in order to set limits to State debt at times of fiscal crisis and, above all, to define the specific responsibilities for mismanagement of public expenditure.

Outside the Legislative building in downtown San Jose, authorities did not take it lightly, ready for any outbreak of violence. In the photo is the police tactical vehicle known as “La Bestia” (The Beast) ready to back up the large number of police officers surrounding the legislative complex.

President signs the approved bill into law

In less than two hours of the Legislative Assembly approving the Tax Reform bill, President Carlos Alvarado communicated he had signed the bill into law.

Shortly after 8 pm, President Alvarado announced that he had signed the document brought to him by deputy minister of the Presidencia at 6:13 pm.

For the Plan Fiscal to be set in stone it now requires its publication (in print and digital form) in the official government newsletter, La Gaceta, which is expected before the end of this week. The publication is merely a formality.

“With the approval of the tax reform, the country has avoided an economic crisis,” said the president, who argued that the country made a “courageous” decision that gives confidence, certainty and stability at home and on the world stage.

“The situation of public finances reached a critical point, putting at risk the sustainability of our social State of law,” said Alvarado. “It will take some time to see the results of greater scopew. This is not a minor achievement, it has not been easy”.

 

Rico
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

Netflix confirms Costa Rica users will charged VAT from October 1

(QCOSTARICA) Starting October 1, Netflix users in Costa Rica will see...

Global income tax? Legislators ask Carlos Alvarado not to waste time

(QCOSTARICA) Instead of promoting proposals that affect the economic reactivation and...

MOST READ

COVID -19 “R” rate: Each positive case still produces only one new contagion

(QCOSTARICA) The reproduction or "R" rate of COVID-19 in the country currently shows a downward trend, reaching close to 1, according to data from...

Is it witchcraft that leads a man to leave women’s underwear at her home?

(QCOSTARICA) Mayden Chamorro still doesn't understand why a man has left her used female underwear outside her home every Thursday. Could it be part of...

A Tarnished Peace in Latin America

It is with pride that we speak of peace in Latin America The long civil war in Colombia has been settled after twenty years...

Government’s scare tactic!?!!

The government tries to scare with a "campaign of fear" to press for agreement with IMF.

College Blogging: Tips to Write Hype Content

If you’re into blogging, you’ve probably heard Bill Gates’ famous words: Content is king. There’s no better way of capturing the importance of quality...

10 points to Costa Rica’s migratory situation in the face of COVID-19

(QCOSTARICA) Since last March 6, when the first case of positive case for Coronavirus was reported in Costa Rica, unleashed was a series of...

Let's Keep This Going!

To be updated with all the latest news and information about Costa Rica and Latin America.

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.