Monday 26 September 2022

The Marchamo dilemma

Legislators and Presidency both agree to a 50% cut in the property tax of the 2021 Marchamo, what is still not agreed is the cap on values

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24 September 2022 - At The Banks - BCCR

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OPINION – In less than two weeks, on November 1, unless there is a setback, the 2021 Marchamo goes on sale.

Some publications on social networks and WhatsApp groups suggest or announce with concern that the 2021 Marchamo will cost more.

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Well, that is not true, according to official sources such as Carlos Vargas, general director of Taxation of the Ministry of Finance.  In addition, the cost of the following year’s Marchamo is not known until November, when the Ministry of Finance updates fiscal values (tax values) and the INS – national insurer – who is in charge of collecting the Marchamo, publishes the costs.

That typically all happens on November 1.

And this year, despite the pandemic, the rumors, it should not be any different, even with the back and forth discussion between the Legislative and Executive branches of government.

Both sides agree that the property tax portion of the 2021 Marchamo that represents about 68% of the total cost, should be cut in half (50%). The discord, however, is on the cap: legislators are favoring the proposal (there were five at last count) to include vehicles with a fiscal value of up to ¢20 million colones (about US$34,000 dollars); the government, however, wants to see that amount ¢4.2 million (about US$7,000 dollars), stating that it includes 80% of the vehicular fleet in the country.

Look around, how many cars can you can mentally picture on the roads today would a fiscal value of ¢4.2 million or less?

Many of the cars on the roads today are or newer, better equipped with extras such as air conditioning, automatic and electric windows are now the standard. I don’t have access to the statistics that the Ministro de Hacienda (Minister of Finance), Elian Villegas, has, but I do have eyes.

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The ¢20 million, although favorable to many, may be a little too high, hitting the administration deep in the midst of an economic crisis, a crisis that made more difficult by the pandemic.

Owning a car in Costa Rica is a luxury while being a necessity. In many cases, owners of vehicles pay more in property tax on their rides than on the roof over their heads.

I would suggest a cap of ¢10 million (about US$16,000). It would give a respite for the courier, the farmer, the taxi driver, the tour operator, the merchant, whoever uses their vehicle to work or move around, without generating benefits for those who have experienced the pandemic from privilege and without any affectation.

Owners of boats, aircraft and vehicles over the ¢10 million must pay 100%. Also, the reduction should not be extended to legsilators, nor to the President, Vice Presidents, Ministers, Vice Ministers, Magistrates, Comptroller, Deputy Comptroller, Attorney, Deputy Attorney, Defender, Superintendents, heads of autonomous (public) institutions, and members of the Boards of Directors of State Banks, among others.

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The reduction of the 2021 has to happen, thousands in Costa Rica drowning in debt and eager to work. The annual Marchamo due on December 31 will be a strain on most. A reduced amount to those in most need will ease the burden.

And it has happen now, it must be approved before the beginning of November, otherwise, it could not be applied for 2021.  After November 1 – as is the custom – the amount could not be reduced, since no law is retroactive.

What is the Marchamo?

For the uninitiated in Costa Rica, the Marchamo is the Right of Circulation, which represents mainly two items: the Vehicle Property Tax that represents approximately 68% and the Mandatory Insurance for Motor Vehicles (SOA) which represents approximately 22% of the total cost.

The other items covered by the Marchamo are: A contribution to the Road Safety Council; Sales Tax on SOA – double taxation or what?, unpaid traffic tickets, parking meters, a tax in favor of the municipalities, contribution to Fauna and Scout and Transporte Público. Look at the back of your current Marchamo for a full list.

The fiscal value of your vehicle can be found here. But if you go there now you will only find a notice that the values are being updated. Check back next week or on November 1.

So, what is going to happen?

Personally, it won’t make a difference, neither of my two vehicles are new enough to be affected greatly, but I know many who will see a big difference in these strange times.

 

 

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"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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