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Overwhelming majority of Costa Ricans support Solis tax package if services improve

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September 24th, 2015 (ICR News) Nearly 90 percent of Costa Ricans would support a far-reaching tax reform package being pushed by the Solis administration if improvements in public services, infrastructure and education are guaranteed, according to the most recent survey by the Center for Research and Policy Studies (CIEP) of the University of Costa Rica (UCR).

 

The poll, conducted between August 10th and September 3rd consisted of 800 telephone interviews with people across the country, and found that 89.6 percent of respondents would support the tax package if such improvements are guaranteed.

 

The administration’s tax package calls for the abandonment of the current 13 percent sales tax in favor of a 15 percent value-added tax (VAT) on both goods and services.  Exceptions would be made for basic food staples and education services.

 

In addition to the VAT, other reforms included in the plan include doubling the transfer tax on real estate from 1.5% to 3%, doubling the transfer tax on motor vehicles from 2.5% to 5%, big increases in the income tax (for those required to pay it), and a 15% tax on all forms of capital gains.

 

The reforms have faced strong opposition in the Legislative Assembly, with lawmakers from seven out of nine political parties opposing the reforms as of early August, though reports would suggest that the opposition is weakening.

 

Opposition lawmakers have repeatedly called on the administration to make significant cuts to public spending – including “mega salaries” paid to public servants – before asking the country’s citizens for more tax revenue.

 

In the CIEP poll, however, just 20.9 percent of respondents said that spending cuts should be made as a condition of the tax reform package, and only 23.9 percent agreed that “most public employees are overpaid.”

 

The poll has a margin of error of 3.5 points and a confidence level of 95%, according to CIEP.

 

The results of the poll may be surprising, considering that the reform package would directly impact the pocketbooks of many Costa Ricans.  The VAT tax would mean higher costs for electric, water, rent and grocery bills for many residents, and the cost of building a home could increase by 14 percent or more. 

 

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  • prdatki

    I have not heard of any one agreeing that Louie has done any thing right.Most agree that Louie , Congress and the Public sector are paid way too much and all of their benefits should be cut 100 %.

  • Yeims

    The simplest and most direct definition of “customer satisfaction” is that they feel they got their money’s worth. The same probably holds true for “citizen satisfaction”. Great health services, for example, at extremely reasonable prices made possible by high volume, combined with excellent, friendly, convenient, and personalized service, evaluation programs seeking ideas from clients and employees to provide constant program improvement, everyone happy . . . paying taxes willingly because it’s such a good deal . . . who wouldn’t agree to that? Denmark and Norway were able to at least approach this goal, but then again, they are first world countries. Costa Rica is a second world country and in my humble opinion, has a long way to go to achieve anything even vaguely resembling such an ideal.

  • Roberto

    Sheep. Did they only interview employees of UCR and the government?
    More broken promises ahead. The govt. cannot even investigate the La Trocha fiasco Yesterdays existing or non-exiting services, always at tomorrow’s prices. Sheep.

  • disgsted

    Reported over 305,000 work for the Government not counting the local government. There is unwritten code not to make waves and keep your mouth shut… So the huge government keeps their employees in line. Years ago my neighbor who works for ICE had the task to clean up the stadium. She was not happy spending her day off however she wants to keep her job.. Later found out the CEO’s and such were at the Beach in Mal pias nice… eh! Laugh when the word “confidence in government” oxymoron.. Nice more taxes a coming.

  • Ken Morris

    Well, I support the tax reform package, including the tax increases, but even I have to admit that these survey results appear biased.

    Yes, the average Tico will pay a bit higher taxes, maybe around $10 more a month when the 15% VAT replaces the 13% sales tax, but in reality 90% of Ticos won’t pay significantly higher taxes. What do they care if the tax bills go up for the other 10%?

    Neither were the tax bills ever premised on the promise of better services–nor should they be. The intent of the bills is to improve tax compliance and increase tax revenues (in order to help close the gap between the government’s income and its expenditures). Nowhere was an improvement in services promised, and it’s a silly promise. Costa Rica is trying to pay for the services it already provides. Improving services is going to take a lot more than these tax bills.

    So, you know, WTF. The most important findings of the survey are that Ticos don’t want government spending cuts and are unmoved by the rhetoric about so-called mega salaries.

    But it’s no real surprise that 90% of Ticos would support tax increases that the other 10% will pay for if there are better services. Who among the 90% wouldn’t take that deal?

    • Roberto

      If, as you say, the intent of the bills is to improve tax compliance and increase revenues, they why should the tax rate BE INCREASED???. We all know that at 13% it is more of a burden on the lower class.

      • Ken Morris

        I’m not following. Since increasing tax revenues even with better compliance is an aim of the bills, increasing the tax rates is pretty much a given, isn’t it?

        As for why the proposed VAT inches up 2% higher than the sales tax it replaces, I don’t know the answer. My guess is that there are two explanations. One is that asking everyone to pay a little more helps sell the tax reform package to those who will be expected to pay a lot more. Since the wealthy don’t like to be singled out for tax increases, spreading the burden around to others is probably smart politics. The other explanation is that the IMF, various bond rating agencies, and other global actors want the higher VAT rate. (Actually, I think most of these outfits want the rate above 15%.) As a small country deep in debt, Costa Rica needs to acquiesce to some extent to these external actors.

        Meanwhile, for those concerned about regressive taxation, the bills include a provision for the poor and low-income to receive an annual rebate for part of the VAT they paid. Projections are that 40% of the population will be entitled to these rebates. However, this provision strikes me as almost silly, since people must apply for the rebates online. While some of the 40% probably will, I predict that many won’t. The really poor (usually estimated at around 20% of the population) surely don’t own computers or have internet access, so they’re going to have to trudge to internet cafes and try to figure out how to claim their rebates–not a task that all will accomplish successfully.

        But who knows what will happen. Some forecast that the bulk of the tax bills won’t pass anyway, while it’s always possible that the legislature modifies them. The legislature could after all cross out 15% and write in 13% if it wants to. This is just the tax reform package that Solís believes will work, but he’s only one of the two main branches of government required to pass laws, and the legislature could change his bills dramatically or even kill them.

        • Roberto

          Ticos on social media are angry…”organized on social networks Ticos said they were tired of the ‘abusive privileges’ of the wealthy oligarchy.” I guess that the CIEP didn’t survey these folks.

  • Roberto

    The absence of 18 congressional deputies prevented Friday’s legislative session would be held, although the Congress had pledged to work this day to make up for their absence on Monday Sept. 14th, which made the holiday on Tuesday the 15th a 4 day weekend!

    Mal mensaje¡ Many MPs called it a ‘bad message’, despite the
    call for meeting today, the majority of deputies did not come. Only 29 deputies were present, and 38 are required for meetings.

    Many said that the Citizen Action Party (PAC) only had 2
    legislators: Otton Solis and Victor Morales Zapata. The latter said this is a “bad message to citizens”, and considers that they must replenish
    this time, “the public deserves it”.
    Several MPs justified their absence because of a temporary closure of
    the the streets around the Assembly and others said many lawmakers had previously planned tours out of San Jose (beach?). crhoy.com

  • Roberto

    Large march today against Recope and new taxes. The marchers also grouped complaints against
    higher taxes, unions and government action on these issues. A red and white
    tide came from the statue of Leon Cortes in La Sabana, heading for the Plaza de
    la Democracia. “No more Recope, no new taxes and Albino out” were some of the claims made
    by the participants. The march was
    organized on social networks and attendees said they were tired of the ‘abusive
    privileges’. crhoy.com

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