Expert: “Costa Rica in desperate need of a tax reform”

November 28^th, 2012 (InsideCostaRica.com) According to researchers of the Fiscal Studies Program at the National University (UNA, in Spanish), not having a tax reform plan for Costa Rica is simply not an option for any candidate running for president in 2014.

Fernando Rodriguez, one of the researchers, believes that any presidential candidate running for office will have to include a new fiscal plan for the country as part of their platform.  Without tax reform, he said, it would be impossible for any future candidate to keep any of their platform promises or implement any additional programs in the country.

Rodriguez said that Costa Rica urgently requires more revenue, which austerity measures alone cannot keep up with.

According to Rodriguez, the failure of legislators to approve a fiscal overhaul this year means that smaller taxes such as property tax and sales tax are not enough to meet the country’s necessities. This comes in addition to the slowing growth of sales tax revenues, which have declined from 20% annual growth to just 10%.

Rodriguez made no mention of revenues from import taxes or income taxes.

According to the researchers, the annual budget deficit could reach 5.2% of Gross Domestic Product (GDP), and without fiscal reforms the national debt could reach 50% of GDP by 2020.

Rodriguez said it would be a mistake for any presidential candidate to not to make tax reform part of their platform, as they would later be forced to deal with the issue as part of their administration should they get elected, as has happened with President Laura Chinchilla.