The mayor of the province of San José and former presidential candidate, Johnny Araya, in his speech in the civic act of September 15 asked that municipalities should not adhere to the fiscal (tax) ule, but not to the “unsustainable privileges” either.
“It is not fair that institutions that generate our own resources (tax revenue) have to adhere to the fiscal rule,” said Araya.
In the same tone, Araya did not agree to the “privileges” extended by the Caja Costarricense de Seguro Social (CCSS) to its 57,000 employees in a deal signed in February and then last month that put an end to the public health worker’s strike. The agreement has since been repealed after the Comptroller’s office ordered the CCSS to cancel the agreement that was in effect contratry to the Fiscal Reform that went into effect last December.
The mayor was emphatic in saying that it is necessary to cut the expense caused to the State by the “unsustainable items” that benefit a few and called on the Executive Branch and the different social sectors of the country to seek a solution to the conflict that has gripped Costa Rica for some months.
Araya spoke the words in front of President Carlos Alvarado, Carlos Ricardo Benavides, president of the Legislative Assembly and Fernando Cruz, Chief Justice of the Supreme Court, and other government officials, during the Sunday morning independence day ceremonies in the Plaza de la Democracia, in the heart of the city of San Jose.
Despite the claim by the municipalities that since their produce part of their own income through taxation, they should be exempt from the Tax Reform law.
This despite the warning by the Comptroller’s Office that this is not entirely correct as they also receive revenue (by way of transfers) from the Central Government.
The fiscal rule is a mechanism that contains tax reform and that puts a ceiling on the growth of spending in the State, mainly in salaries, service payments and transfers.
President Alvarado has asked the entire public sector to apply this rule to contain public spending that helps shore up public finances.
The rich pay as rich and the poor pay as poor
In the same speech, Araya also said that a tax reform should be progressive and must be guided by the principle that the rich pay more tax than the poor. Otherwise, he says, it will be incomplete.
“As Alfredo González Flores (president of Costa Rica between 1914 and 1917) said more than a hundred years ago, the rich pay as rich and the poor pay as poor.
“If we achieve that, it is also necessary to punish evasion and control the circumvention that are factors that contribute to the increase of poverty and inequality,” demanded the mayor, who aspires re-election in the 2020 municipal race.
However, Araya believes that the public sector must contain “unbridled” spending in “unsustainable” items that only benefit a sector of society, without specifying which groups her referred to.