TICO BULL – One of the issues made clear by both foreign and national businesses, is that Costa Rica has to cut its electricity rates.
So, while the president on the one hand gives us the impression that he agrees that electricity rates are high and efforts should be made to lower them, his minions are plotting an increase in the way of more taxes.
The Ministry of Finance this week announced a proposal to move from a sales tax on goods, to Value Added Tax on goods and services, that will include taxing electricity consumption of 250 KWH or more.
Currently, there are is no sales tax on electricity.
I checked my consumption for the last six months. The CNFL, the national power and light company, is so nice of them to provide a record of consumption for the last six months. My bill tells me I consume an average of 10.5 KWH daily, for a average monthly (30 days) consumption of 315 KWH.
Based on my consumption and the current rates, by the end of this year, my average monthly cost will increase by ¢3.900, ¢4.225 next year and ¢4.530 in 2017 (based on a VAT of 13% for 2015, 14% for 2016 and 15% for 2017).
This is might not seem much, but what about a business that, first pays higher rates than residential and second consumers way more than my 10 daily.
This is reducing electricity costs? It appears to be the same accounting principle of counting job fair jobs announcements as a jobs created.
I fear that, if the VAT proposal is accepted as presented, more businesses – both foreign and national – will choose to abandon the country. Or at the very least cut back on their payroll as they trim expenses.
Me, I am going to turn off that ligth bulb that in the hall I keep on all night, just in case I have to get up in the middle of the night. Oh, yeah, off goes the “porton” light. I am going to disconnect my electric garage door opener, I can do it manually. Probably need the exercise anyways.
Out will go the electric stove. I recenlty built an open air BBQ that can I use to cook meats and boil water to make my pasta. Out goes the suicide shower. Cold showers from now on, I will get used to it.
My computer time will be limited, am going to stretch every bit of power out of the battery. Go to the local mall to charge up.
Will have to probably give up my expresso coffee machine, “choreado” will have to do (with water boiled on the BBQ). And will have to limit my television viewing to a select group of shows I really can’t live with. Repeats, click off.
The goal is to keep my consumption to less than 250 KWh monthly (8.3 daily) and thus avoid being taxed.
Mr. President, NOT a smart move to tax items as electricity, rents, water and health services over a certain limit, a limit that, well may just be beyond my ability to live within.
Kind of hard to sympathize with a fella who has an electric garage door, and presumably a car to put in the garage too.
Personally, I’d like to see the tax start at 300 rather than 250 kwh, plus for it to only start at the limit, rather than apply to all usage below the limit too if you go over it. I sometimes come in under 250, but not usually, and think the problem is an old fridge. However, I’ve seen data showing that my usage is above average, so I’m not sure I have grounds to complain.
The part that I’m not following in this article and the anti-tax crusade generally is how people can forget the basic truism that there’s no free lunch. Electricity costs money to generate and distribute, and government programs cost money. Somebody has to pay for both. Any time anything is sold below the cost of producing it or tax free, something else has to be sold above the cost of producing it and at a higher tax rate to make up for the loss.
Basically, why on earth would anyone favor public subsidies of electric garage doors?
Not anti-tax, just not a very well thought-out plan, like tax the entire amount if you go over 1 KWh, and not just the overage.
I picked on electricity in specific since it is one the items being mentioned over and over by businesses as a cost factor in the decision to leave. And the country has ICE that, one, could generate a lot more cheap energy than it does and two, ICE profits are kicked up to the state coffers – kind of a tax on the tax of the taxed.
Start at the top , remove all benefits from Elected and Appointed officials, Why does each member of Congress get $200 a day for food. Cut all pensions to Govt. Employes to $800 max, any one receiving more has to pay it back! The Govt. has to stop paying the Church over a Million dollars a Yr. instead Tax the Church 2 Million a year put the money in to schools.Have prisoners work, grow there own food and plant cotton.Audit all members of Congress any one guilty of a felony is executed.Well that should be good for a start!
Electricity rates in Costa Rica cannot possibly be justifiable based on supply/demand. The Costa Rica government needs to stop using ICE as an overpriced cash cow.