Today, Monday, the tax reform bill “Ley de Fortalecimiento de las finanzas públicas’ will suffer a new impasse: a pause in the legislative process to make way for the new Legislative Assembly that forms on May 1.
On April 30, the current crop of legislators will end their four-year mandate (their constitutional period) and the new legislative fractions will take their seats the following day.
The change implies a completely new set of legislators will be continuing work on the tax reform bill, many of whom will surely call for further review and study before the bill hits the legislative floor.
But, wait, there is more bad news, or good news, depending on your point of view on the proposed tax reforms, new legislative commissions have to be named and positions filled.
It must be noted here that the ruling party, the Partido Accion Cuidadana (PAC), led by Carlos Alvarado Quesada, does not have a majority in the Legislative Assembly, thus political alliances will rule and that could mean the legislative agenda could be ruled by an opposition coalition, that will elect the new president (speaker of the house) for the next 12 months
The advances on the tax reform, that has been a project of Luis Guillermo Solis and the PAC, will surely suffer yet another setback if the new group of legislators and their respective group leaders question the text agreed upon tex by the current legislators.
Luis Paulino Mora, the current vice-minister of the Presidency (chief-of-staff), sees the change as only a 15-day delay and is positive the new crop of legislators will approve – at least vote on – the bill before the end of May.
However, Mora is realistic that the process could be extended, despite the fiscal urgency of the country.
The main proposal in the tax reform bill is the change from a sales tax to a Value Added Tax or VAT.
For simplicity sake, under the VAT, the current tax of 13% on consumer goods would be extended to services, such as legal and accounting fees, the car mechanic, on rents over a certain amount and loans among other items.