Tuesday 15 June 2021

Poverty-Crusader Solís Cannot Give What Has Not Been Created

(QCOSTARICA BLOGS) The key ingredient necessary for greater tax collection is a growing nation. If you want to generate more revenues, look for ways to foster productive activity, as opposed to squeezing a stagnant economy. Otherwise, at some point, higher rates and burdensome compliance will kill the golden goose and bring in less revenue.+

Laffer curve. Art Laffer, a US economist, popularized the economic truism that there is an inevitable trade off between higher tax rates and higher revenues.
Laffer curve. Art Laffer, a US economist, popularized the economic truism that there is an inevitable trade off between higher tax rates and higher revenues.

Higher taxes compromise employment, disincentivize entrepreneurship, and increase the cost of goods and services, both directly and indirectly. That this would, therefore, undermine the very purpose of tax collection in the medium and long term is only logical.

- Advertisement -

A tax system ought to be simple, efficient, and neutral, as opposed to a spider’s web of requirements that impede collection. The flat tax, for example, has minimal impact on export development, savings, and investment, when accompanied with a disciplined state of austere spending and institutional order.

On the other hand, the ad hoc approach of the Costa Rican central government has skewed its decision making, lacking technical nous and falling prey to special-interest manipulation. The shortsighted emphasis on immediate concerns has created a climate of uncertainty, and as a consequence, various business undertakings and investments have failed to materialize.

In particular, these fly-by-night attitudes discourage foreign investment in Costa Rica. In just a short while, we shall see striking outcomes in rates of unemployment, competitiveness, and income. Already, according to the Economic Commission for Latin America and the Caribbean (ECLAC), Costa Rica’s foreign investment fell 21 percent in the first half of this year.

This problem takes some unraveling, since to finance the state’s promised internal investments, those in power need an ambitious strategy — relying on taxes, domestic savings, and foreign debt. Those who elected this government and chose this debt-financed course of action, whether they realized it or not, have invited risks for Costa Rica.

- Advertisement -

Foreign debt, particularly when it is difficult to service, compromises a nation’s sovereignty to the creditors (just ask Argentina), more than foreign investment ever could. This reason alone should temper our tolerance for debt and keep government spending in line with national income.

There is an alternative path: offer a clear, predictable legal framework, free from arbitrary discretion, so as to not suffocate economic growth and social progress. Many of us have learned the virtue of giving, rather than creating; but what has not been created cannot be given.

President Luis Guillermo Solís and his supporters may take great pride in their slogans against poverty and inequality. All evidence, however, indicates they will make us poorer. That is particularly the case for the least advantaged among us, who suffer the most from macroeconomic instability.

- Advertisement -

FACT CHECK:
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.

Mariela Palmahttp://www.fundacionamericalibre.org/
Mariela studied Licenciatura en Comercio Exterior at the University of Costa Rica, live is San Jose (originally from Palmares) and is currently the president of the Asociacion America Libre, works at ANFE, a non-governmantal organization (NGO) and the Legislative Assembly of Costa Rica. Her political views of that of the Movimiento Libertario and heads the party's youth organization, Juventud Libertaria.

Related Articles

Nicaragua government assures that detainees violated one of the Ten Commandments

TODAY NICARAGUA – The vice president of Nicaragua and First Lady,...

Simple to request certification of vaccines against covid-19 applied in Costa Rica and abroad

QCOSTARICA - The Ministry of Health issued a new guideline on...

MOST READ

Today’s Vehicle Restriction June 15: 3 & 4 CANNOT circulate

Today, Tuesday, June 15, vehicles with plates ending 3 & 4 CANNOT circulate The measure is countrywide and applied between 5:00 am and 9:00 pm,...

Nicaragua’s Foreign Minister absent from the summit of Central American presidents

QCOSTARICA - The Daniel Ortega government sent its ambassador to Costa Rica, Duilio Hernández, as its representative to the summit of Central American presidents...

Tourism sector feels in crisis despite increase in international arrivals

QCOSTARICA - Despite the improvement in tourist arrivals reported in May, with more than 72,000 visitors, both the Cámara Nacional de Turismo (Canatur) and...

Bukele advisers tried to leave Costa Rica with false covid-19 tests

QCOSTARICA - Two Costa Ricans who advise the government of Salvadoran President Nayib Bukele were arrested this Tuesday at the Juan Santamaría (San Jose)...

Central America is back in the news for the wrong reasons, Costa Rica is once again the exception

QCOSTARICA - Osta Rica has been the epicenter of regional diplomacy in recent days. The successive visits of the Secretary of State of the...

Direct flight will connect Guanacaste with Austin starting in November

QCOSTARICA - American Airlines announced that starting November 2, 2021, it will offer a direct flight between Austin, Texas and the Daniel Oduber International...

COVID vaccines in the workplace: Can I ask who got their shots?

(DW) Jon works for the local government in the US state of Virginia. The 40-year-old received both his COVID shots in April. Most of...

Apple extended the life of its older iPhones

QTECH - Whether due to the global economic crisis caused by the Covid-19 pandemic or due to shortages of electronic components, raw materials, factory...

Today’s Covid News: A slight drop in new cases and deaths is seen

QCOSTARICA - Faced with wasting a vaccine dose when people in the priority groups scheduled do not show up, and a substitute cannot be...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

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.