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20 years

Presidential candidates Araya, Guillermo support creating Value Added Tax

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Johnny Araya

PLN presidential candidate and former mayor of San Jose, Johnny Araya (archive.)

October 22nd, 2013 (InsideCostaRica.com) While aware that the proposal of a new tax is unpopular, two presidential candidates – facing a fiscal deficit should they be elected – are already coming out in support of the creation of a new Value-Added Tax (VAT) in Costa Rica.

 

National Liberation Party (PLN) presidential candidate Johnny Araya and Citizen Action Party (PAC) candidate Luis Guillermo Solis have come out in agreement with the creation of the new tax.

 

Araya, saying that the fiscal deficit threatens the country, said that he supports the VAT as well as taxes on capital gains as measures to increase government revenues.

 

Solis, meanwhile, said he supports the creation of the VAT but warns the transition should be gradual.

 

 

On the other hand, Frente Amplio (Broad Front) presidential candidate, Jose Maria Villalta, prefers to reform the income tax to encourage better collection of existing taxes, and to more severely punish tax evaders.

 

A paper released on October 17th by Finance Minister Edgar Ayales proposed a series of new taxes, including the creation of a VAT, as well as new taxes on private healthcare and private education, amongst other proposals, to reign in the government’s fiscal deficit.

 

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  • Daryl Smitts

    Another nail in the coffin of the Costa Rican people… Ever notice people that these “systems” are not working? God Save Costa Rica!

  • Ken Morris

    I think Solis and the PAC are making a serious political mistake.

    The PLN with Araya’s support have handed the opposition a strong centrist issue to run on, namely taxes. If the PAC was at all savvy, it would craft a clear alternative tax plan and make it the centerpiece of the campaign. By agreeing with the PLN on a VAT, the PAC is giving away the one issue on which it could conceivably win.

    By agreeing, the PAC is also severing its ties to the farther left, when a PAC victory would require a broad center-left coalition.

    Apparently, the PAC hopes to win on a campaign against genetically modified food alone. Sorry, that’s not a winning issue.

    And BTW, I’m cynical/realistic enough to appreciate that a PAC victory could well end up with a VAT too, and that a VAT properly balanced with other taxes may not be a bad idea. But when a headline in effect says “No Difference Between the PAC and the PLN on Taxes,” the PAC loses the crucial opportunity to contrast itself with the PLN and then loses the election.

    Neither do I see another party capable of giving the PLN a run for its money, so I guess we’ll see a PLN victory, a VAT, and no doubt continuing corruption that wastes most of the money anyway, no matter how it is collected.

  • roberto

    I am voing for Jose Maria Villalta, Frente Amplio.

    • Gene Warneke

      Ways need to be found to collect taxes from wealthy Ticos. They easily find ways around paying any significant taxes, leaving the burden of taxation upon the lower wealth classes. If the politicians don’t act on this (and they won’t), sooner or later Ticos will rise up and shut down the country through national strikes until they think they’re getting some taxation justice. This is the way it works here.

  • terry

    Things like computers are already double from what they are in the US. How much will this add to that?

    • Suzie

      This country is already bordering on becoming third world again. How much do they think people will pay for things down here? How about more time, energy, and money for ramping up computer systems for the country to collect already existing taxes. I pay mine every year but I know plenty of ticos who don’t because they can’t afford them after paying the high taxes on everyday items. The taxes on food were horrible.

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