RICO’s DIGEST – Why, if a truck worth ¢70 million colones only pays ¢59,000 for the Marchamo, I or you pay more than that for our car or SUV?
In social networks you can find many examples of inequities of the Marchamo, the latest I came across is that of a 2018 big truck that pays only ¢59,000 for the 2022 Marchamo, much less than a large number of passenger cars of older models, such as my 1975 Toyota Landcruiser.
And I bet less than what you will pay between now and December 31, without knowing what type of vehicle, make or year you drive.
How is that possible?
For most car owners, the most important item of the Machamo is the vehicle property tax, created by law in 1987.
The Marchamo is made up of seven items, but the property tax represents 66.4% of the total amount, according to data from the National Insurance Institute (INS), an entity that charges the right of circulation.
Following is the mandatory insurance (SOA), contribution to the Conavi, tax for municipalities, stamp for wildlife, law 7088 and the VAT.
Back in 1987, law 7,088 established a table to calculate the tax on cars according to their fiscal value. It is a progressive table, in which the payment of the tax increases as the value of the vehicle increases.
Each year, an executive decree updates the tax values according to the depreciation and inflation adjustments.
For example, for my 1975 Landcruiser, with a fiscal or tax value of ¢310,000 colones, I will pay this year ¢72,655 colones. Of this amount, ¢29,180 corresponds to the property tax on the vehicle.
However, the owner of a passenger bus, a taxi or a heavy-duty truck, regardless of its tax value and model (it may even be from the last year), will only pay ¢8,000 for property tax on the vehicle.
In other words, I pay ¢29,180 for my 1975 vehicle with a fiscal value of ¢310,000, the tax of 2018 heavy-duty trucks with a tax value of ¢70 million will pay only ¢8,000 colones.
The tax on this vehicle and others in its class, is fixed, according to a legal provision approved by legislators in 1987. Simple as that.
“In subsection f) of Article 9 of Law 7,088 there is a table that applies to motorcycles and transport vehicles.
In the case of motorcycles, a fixed amount is paid per cylinder capacity. Not on the tax value. It has a cap of ¢15,000 and is per cylinder capacity.
“In the case of heavy-duty trucks, buses and taxis, they do not pay above the tax value but pay a fixed rate. As far as memory gives me, it is ¢ 8,000. This has been the case since the law was approved in 1987. This has no update because the law at that time did not provide for an update of the amount,” explained Carlos Vargas, director of Tributación Directa (Direct Taxation).
Is it possible that this example is real or is it made up?
Carlos Vargas, from the Treasury, responded: “It could be perfectly possible that that truck pays that, but not because the cooperatives have a privileged or special treatment, but because the law establishes a tax that is fixed.”
Back in 1987, ¢8,000 colones was not a small amount.
Taking into account inflation, using a special calculator that takes into account the Consumer Price Index (CPI) prepared by the National Institute of Statistics and Censuses (INEC), the equivalent of ¢8,000 back in 1987 is ¢222,349 colones today.
Why has this never changed? Is it a mistake? Was there no will of the different legislative assemblies in all these years?
“I don’t know if that will be the issue or that the bill has not been presented. I think it is an issue that has not been made visible. We are going to work on the bill with an update of the value and with the regulation that it will continue to be updated in the future. That has not changed because it requires legal reform,” Elian Villegas, Minister of Finance, told La Nacion.
For his part, the Director of Taxation, Carlos Vargas, basically explained the same thing, using different words, saying that “it has not changed because it requires legal reform, and that tax is from a time when these amounts were not established by updating schemes for inflation. That was not done before, that is why it does not exist. I would not say that it is a mistake. It’s just because of the period in time.”
It may not be what you wanted or expected to hear. The inequity is because that is how it is in Costa Rica and there is nothing more to be said about a matter.