Thursday 30 March 2023

The future of the 2022 Marchamo reduction in limbo

The 2022 Marchamo collection begins on November 1. Will the president sign the approved bill to give property owners a break in the tax portion of the Marchamo?

Paying the bills


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30 March 2023 - At The Banks - BCCR

Paying the bills


RICO’s DIGEST – Although the Legislative Assembly approved by majority vote the reduction in the 2022 Marchamo, the bill currently sits in limbo, waiting on the signature of the President, to which we have yet to know will or won’t he.

The 2022 Marchamo collection begins on November 1. Will the president sign the approved bill to give property owners a break in the tax portion of the Marchamo?

President Carlos Alvarado, who has shown his discomfort with that initiative, has not answered clearly when the press has asked him if he will use the power of the veto to tank the bill.

Making this reduction different from the one applied to the 2021 Marchamo at this time last year, is the presidential elections coming up in February and the “mirage of savings” that candidates and political parties will use to campaign for votes.

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The President’s power to veto is regulated by Articles 125 and 126 of Costa Rica’s Constitution. “If the Executive Power does not approve the bill voted by the Assembly, it will veto it and return it with the pertinent objections,” reads, among other points, article 125, while article 126 sets a 10 business day limit, from the day of receipt of a bill approved by the Legislative Assembly, for the Executive Power to veto it “because it deems it inconvenient, or believes it necessary to make changes”.

In such a case, the Executive (Government) must propose the changes when returning the bill to the legislators.

If the Executive does not veto the bill within the 10 business days, it cannot stop the next and final step in the process, the official publication in La Gaceta.

If President Alvarado vetos the 2022 Marchamo reduction bill it will be his fourth of his term in office.

The latest veto was of the Ley de Voto Informado (Informed Voting Law), on August 9, 2021, followed by the rule that authorized trawling, in October 2020; and the Law that reformed the specific destinations, on October 17, 2019.

On the first, the presidential veto allowed legislators to amend the mistake of not sending to mandatory consultation before the Tribunal Supremo de Elecciones (TSE).

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Alvarado justified his veto of the trawling bill saying that according to the analysis of the Executive Branch, there were not enough scientific elements and technical studies to support the sustainability of shrimp fishing by trawl.

The approved the bill includes a condonation of all outstanding Marchamos if the owner pays the 2022 Marchamo by December 31, 2021.

Regarding the project of specific destinations or minimum budgets for regional university headquarters, the president said that his decision was based on the fear that the drafting of the project approved by the legislators would open doors to rescue other fixed expenses that are eliminated with the approval of the Law to Strengthen Public Finance, or fiscal plan, in 2018.

Timing is of the essence

In the case of the 2022 Marchamo, the bill has to complete the process – approval of the legislature, the signature of the president and publication in La Gaceta – in the coming days, before the end of the month, to allow the Instituto Nacional de Seguros (INS) – state insurer – to adjust the Marchamo prior to the mandated November 1 collection start.

If you will recall, last year, the start of the collection of the 2021 Marchamo was delayed to November 2, due to the late legislative approval and allowing time for the INS to make the necessary adjustments to reflect the reduction.

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Last year there was not the political issue and financial pressure of this time around, the bill was signed forthwith by President Alvarado as there is time around.

The 2022 Marchamo collection begins on November 1. Will the president sign the approved bill to give property owners a break in the tax portion of the Marchamo?

There are three possible scenarios and their effect:

  1. President Alvarado signs the bill in the coming days and on Monday, November 1, 2021, the INS will be able to start collecting the 2022 Marchamo with the reduction contained in the law, including the condonation of almost one million vehicles with past Marchamos owing.
  2. The President vetoes the bill, sending it back to the legislators with changes, which could and could not result in a reduction. This will depend on when the bill is sent back to Congress, the changes, and the political will of the legislators.
  3. The President does nothing. He goes off to Scotland to participate in the COP26, the United Nations Conference on Climate Change in 2021, from November 1 to 4. The bill, not vetoed by the President, runs out its 10 days and becomes law, but too late to take effect.

Stay tuned, “same bat time, same bat channel”.


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