Wednesday 3 March 2021

Reduction In Fuel Tax Proposed

The PUSC legislative caucus has proposed legislation that would result in the reduction of tax on fuels in Costa Rica, the highest in Central America

Costa Rica has the highest gasoline prices in Central America. There is no denying that. A situation that places the country at a competitive disadvantage and affects the pocket of all consumers.

The PUSC legislative caucus has proposed legislation that would result in the reduction of tax on fuels in Costa Rica, the highest in Central America

One of the reasons for the high fuel prices is the tax component that is more than 35% of the price at the pumps.

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For that, the Partido Unidad Social Cristiana (PUSC)  has proposed a bill that would reduce the tax by changing the method of taxing fuels, that would in effect lower the price at the pumps.

Currently, the tax on fuels is based on the Consumer Price Index (CPI). The proposal by the PUSC is to tax fuels on the international price paid by Recope – the State refinery that imports fuels – and establish a maximum tax on that price and not the CPI.

The change, the PUSC legislators say, would reduce the tax on fuels in Costa Rica to levels similar to those in the rest of Central America.

Last year, the Ministerio de Hacienda – the Treasury – collected some ¢575 billion colones (almost one billion dollars), or 60% of the national oil bill.

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“This tax is disproportionate and takes away from Costa Rican families resources that would be devoted to consumption and economic recovery, so necessary in our country,” said the PUSC legislative caucus.

They argue that the eventual reduction in tax revenue on fuels would be balanced with a tax recovery via the Value Added Tax (VAT), income and other taxes.

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