No tax hikes until 2017 as government sets sights on evaders instead

August 8th, 2014 (InsideCostaRica.com) Costa Rica will delay plans to raise taxes until 2017 as the government of President Luis Guillermo Solis focuses on cracking down on tax evaders to narrow the country’s widening fiscal deficit instead.

 

Solis, on the campaign trail prior to his May election, vowed to not raise taxes before 2016.

 

Solis sent a bill to the Legislative Assembly on July 31st aimed at cracking down on tax evasion.  Two additional bills aimed at turning the sales tax (IVI) into a value-added tax and another bill to revamp the income tax scales will be delayed until 2016, ruling party lawmaker Otton Solis told Bloomberg.

 

“We are looking at the middle of 2016 for the presentation of everything, the value-added and the income tax. […] Optimistically we would implement them in 2017,” Solis told Bloomberg.

 

Costa Rica’s tax authorities shuttered 16 businesses this week for failing to comply with the General Sales Tax (IVI).

 

The Ministry of Finance also reminded those who own vacation rentals that they must pay the IVI in the same manner as hotels, warning that stricter enforcement is on its way.

 

The government said this week that the country’s budget deficit will widen to 6.6% next year, an increase of about 0.6%.

 

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  • prdatki

    If the President really wants to do something to reduce cost, First arrest the last President for Theft, graft , corruption etc. Then cut all benefits to Congress , Past and Present, quit giving the Church a Million dollars a yr The church should be taxed. Drill for oil on the Caribbean coast , become energy producer.All parts of the Government should be audited. Prisoners should work in the fields and produce there on food hard work not sitting and learning how to be a better crook.

    • Derryl Hermanutz

      Better yet, why not just sell the entire public infrastructure to investors who can then run the country as their private for profit fiefdom? Everybody knows that private sector corporations are totally uncorrupt and uncorruptible, right? So let’s just eliminate government altogether rather than paying taxes so government can provide public services. Sound good? No public pensions to pay for. No laws against private companies closing down and failing to honor the pensions they promised workers; then starting up again as a “new” company free of legacy costs. No public roads or schools or health care or public courts or law enforcement. Everything you need you buy from the private owners of the country, or you do without. Toll booths on every road and parking meters on every residential and commercial street. Pay full private school tuition or keep your kids at home. No money, no ambulance, no paramedics, no medical treatment. If you have no money to buy water and food then die off already instead of living as a parasite off the “makers”. No more taxes or government interference with private sector “efficiency”. No more worrying about the government enforcing tax collection to pay for public services. Does that sound like the utopia you prefer?

      • Karen Mata

        Similar to what’s happened in the US where a few big financial institutions (aka zombie banks) run the show.

  • Upset with goverment of CR

    If the New Prez what to change the outlook of Costa Rican cut all the salaries of goverment by 50% then Cut pension of ex Costa Rican embassy staff by 70% also cut congress salaries. I know of 50 EX Costa Rican Embassy staff that get $10.000 a month in pension and don´t even live in Costa Rica for 10 years. Enough is enough New prez needs to show that he can first make the cuts of high priced help then start going after the people that pay the taxes to fund goverment. Costa Rican have it tough enough without more goverment in there pockets so the goverment can steal to fund lazy workers in Goverment. How many people are waiting in the CAJA for an operation i heard 40.000 are on waiting lists some have appointments in 2022. New prez is now showing his true colours of anti small business.

    • Derryl Hermanutz

      I agree. The government has to lead the way by cutting their own fat first. If people see the government is no longer paying extravagant salaries and pensions that make rich people richer, the people will not be so averse to paying taxes that fund needed public services

  • Karen Mata

    By 2017 tax law will be written in mandarin.

  • expatin paradise

    This is a good start – focus on tax evasion and tax fraud first, then address new taxes. No details are given on the anticipated changes to the income tax, but hopefully they will assess higher taxes on those with high incomes. I’m not a big fan of value-added taxes (or sales taxes) or the high tax on gasoline, as they affect the poor more than they do the rich. Hopefully, CR will eventually reduce the tax rate on sales and services, and on gasoline.

    Reducing some upper government incomes and pensions will probably be necessary, but many government employees barely get by. Some benefits, such as the high number of holidays given to government employees, the aguinaldos, and the system of mandatory raises (the latter two for all employees), should probably be re-thought. Any reduction of salary or benefits should be accompanied by strong anti-corruption measures, as lower salaries will increase temptation. I strongly support polygraphing public employees in positions susceptible to corruption and independent fiscal audits on all departments and government contracts.

    One money pit in desperate need of repair is the Caja. Everything they do is unnecessarily inefficient and burdensome to their patients. When one is referred to a specialist, he/she has to take the referral sheet on only certain specified times and days to one place, go back later to retrieve a slip of paper that tells when to pick up an appointment, go on a different specified date and time to pick up the appointment, then finally go back and see the specialist on the designated time and date if the specialist shows up that day. Of course, in a private practice, this is a one-step process. There is no reason why this could not be the case with the caja, with the patient making the appointment in person or on the phone, or receiving the appointment via e-mail. This would save the patients a tremendous hassle, cut down on traffic in the hospitals and demand on parking (which is seldom available), and save staff time due to multiple handling. The public hospitals have long waiting lists for procedures because they lack bed space, but they lack bed space because patients are admitted to wait (sometimes weeks) until their procedures are scheduled. If these hospitals operated like private ones and admitted patients only for emergencies or when procedures are scheduled, the backlog would soon be cleared and fewer people would die or have their conditions worsen while waiting for procedures. The Caja is probably the most broken institution here and would benefit immensely from these two simple changes in procedures. When the Caja started, these procedures probably made sense, but today, everyone has at least one telephone and an email account, so there is no reason not to use these technologies to schedule appointments and hospital admissions. What is best is that these changes would not require legislative action or increased funding and could be implemented immediately in an administrative directive.

    Of course there are many other “penny-wise, pound-foolish” practices that hamper efficiency in not only governmental but other office operations. The one that comes most to mind is the absence of printers/copiers/ scanners in office settings, requiring employees to leave their desks and walk across a room to retrieve documents at least once per customer, or even to send customers to another building to have something copied. Since a printer/copier/scanner can be purchased for under $100 USD (even in CR!), this is an extremely inefficient use of employee time (unless it is part of some type of unwritten employee fitness program) and yet another inconvenience to the customer.