Friday 2 June 2023

Protectionism does not allow consumers in Costa Rica the benefit of competition

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2 June 2023 - At The Banks - Source: BCCR

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QCOSTARICA – “Have you ever wondered why you only get one brand of butter in most of the country?”

“Protectionism” does not allow consumers in Costa Rica the benefit of competition, as is currently with butter

The answer lies in taxes, explains financial consultant Jorge Benavides on his Facebook page

This is because the Ministerio de Hacienda (Ministry of Finance) considers butter a “luxury” product and thus taxes its imports of the product heavily: 65% import duty, 1% customs duty and the 13% VAT (value added tax).

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“A bit of protectionism,” says the consultant.

Read more: Butter shortage in Costa Rica

This protectionism heavily benefits local producers, such as the Dos Pinos dairy cooperative, the main producers of butter in the country. In addition, local products have lowered their quality.

“Dos Pinos does not offer quality products and as a monopoly, it does not allow competition. It is time that we enjoy the variety of quality products offered by the competition and at a lower price,” posted a user in the comments section.

Eliminating ‘protectionism’ allows consumers a variety of choices

Another posted, “Competition generates better service, quality and a better price for the user (…) the winner, us ticos.”

However, this protectionism will all change in 2024 when tariffs are reduced and in 2025 when American dairy products start paying a 0% duty, which may see consumers finding alternative brands in the supermarket.

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