With the entry of the tax reform (Reforma fiscal) last December, the salary of President Carlos Alvarado was cut by ¢250,000 colones monthly, his gross pay dropping from ¢5,043,000 to ¢4,793,000.

The drop is due to the fact that the Casa Presidencial (government house) stopped recognizing extras that the presidents used to receive and that he received between May 2018 and November of the same year.

Although the Law on Strengthening of Public Finances (Ley de Fortalecimiento de las Finanzas Públicas) included a provision that no salary could be reduced with the entry into force of the tax reform, the president requested the new tax rules of Article 41 be strictly applied to his salary

The tax reform also places a cap on presidential salaries to not exceed 25 salaries of the lowest category of public administration, which today would be equivalent to about ¢6.9 million; however, the cap does not apply to Alvarado as he is earning well below the cap and even with increases for inflation would still earn below, but it will affect future presidents.

“Respectfully, I would like to request that, as of the second half of December, the payment for representation expenses be excluded from my salary,” Alvarado told Miguel Goñi, head of Human Resources at Casa Presidencial.

In addition, the tax reform increases the income tax paid on the President’s income from ¢577,300 colones to ¢741,200, an increase of ¢164,000.

While the president’s salary was affected, others keep their supplements intact, such as legislators, who receive a gross salary of ¢4 million colones per month, of which ¢1 million are for expenses and allowances.

Comparing salaries

In U.S. dollars, at today’s exchange, President Alvarado will receive this year (2019) a gross salary of $107,409 (¢62,309,000 – 12 monts plus the aguinaldo).

Based on the  Wikipedia list of salaries of heads of state and government, in Central America, the salary of presidents is: Guatemala US$178,680; Costa Rica US$113,520; Panama US$84,000;  El Salvador US$62,172; while in Nicaragua, president Daniel Ortega has a salary of only US$37,316 dollars, the lowest in the region.