Costa Rica’s Red Cross facing financial difficulties

May 4^th, 2015 (InsideCostaRica.com) Costa Rica’s Red Cross is facing a shortfall of finances, amounting to ¢2.126 billion in 2014.

Red Cross chief Idalberto Gonzalez Jimenez told the daily La Nacion that falling income from two key taxes are to blame.

The first is a 1% tax on phone bills that is intended to support Red Cross services.  The tax only applies to phone bills of more than ¢5,000, but a shift by consumers to prepaid telephone services – where typical recharges are just ¢1,000 to ¢2,000 – means the Red Cross receives nothing from those transactions.

The second cause of falling revenues is a 2012 reform that reduced the amount of traffic fines allocated to the Red Cross from 15% of each ticket to 5%.

The end result, Gonzalez said, is that revenues no longer cover the Red Cross’ operating costs.

As a result, the National Council of the Costa Rican Red Cross has ordered 121 delegations across the country to cut costs and seek new ways of raising money.

Gonzalez said that the Red Cross operates using 68% of its own funds, with the remaining 32% coming from State sources, such as the telephone tax and traffic fines.

In 2014, revenues totaled ¢17.238 billion, while expenses totaled ¢19.364 billion – a shortfall of ¢2.126 billion.

This compared to 2011, when revenues were ¢20.106 billion with expenses of $19.102 billion – a budget surplus of a little more than ¢1 billion.

The most significant loss of revenue for the Red Cross has been the lowering of the percentage it receives from traffic fines.  In 2011 that percentage produced revenues of ¢2.376 billion, compared to just ¢344 million in 2014.

Gonzalez said that the Red Cross is promoting a bill before the Human Rights Commission of the Legislative Assembly that would restore the percentage collected from traffic fines to 15% and would include a tax on prepaid mobile phone recharges.

Costa Rica’s Red Cross has 1,080 employees and 6,800 volunteers.