Archives for Tax Crisis Costa Rica

Costa Rican Government Is Drawing Upon More Dialogue in Congress to Obtain Approval of New Taxes

Costa Rican Executive Branch starts its third year of government in Congress with a reduced deck of strategies. Also, the odds of getting new taxes approved does not seem to be in favor of President Solis´ Administration.

The government is faced by 9 different political parties which, have joined forces to fight against the government´s tax agenda. As a matter of fact, seven of those nine parties have promised not to touch any projects related to new taxes until the needed fiscal reforms are in place.

Not only that, this Administration is also facing some other problems in Congress. First, the ruling party does not have the presidency in Congress, presidential elections are coming up, and the liberal congressmen are promising to block the parliament. So, what chances does the President have of getting the new taxes approved?

Parliament Entrustment

President Solis said “(My Administration) will be able to finish its term without suffering severe damage as a result of the tax chaos. However, the succeeding government will be faced with a truly oppressive situation”, in relation to the tax crisis that, according to President Solis, the country will face starting in 2018. According to some political analyst, this is a declaration that transfers the weight of the tax reforms to the political parties that will be running for the presidency in 2018 and releases the current government of the pressure.

Rolando González, PLN Congressman said “the President did not come to give a report of what he has done, instead he gave a speech focused on the future. The fact that he starts to talk about the next government now is an indication that he wants to sail in peaceful waters and is giving on the tax situation.”

The Pacific Alliance, Cuts and Regulations

There are some other strategies that could be useful, but inadequate. According to a political analyst, when the President conditioned the approval of new taxes to be able to access the Pacific Alliance he opened a door that could bring new perspectives to the tax debate, especially outside of Congress where business groups interested in the Alliance could put direct pressure over Congress. Another strategy could be the warning that public purchases could be reduced to almost half in the National Budget for 2017.

Dialogue: Congress Eternal Recipe

The Vice Minister of the Presidency, Luis Paulino Mora, is aware that the situation in Congress might be difficult, but he thinks that the spectrum of action from the Executive Branch regarding tax projects has not changed. He believes it is feasible to approve projects, in the upcoming year, related to pension funds, taxes to corporations, and the fight against tax fraud, but all of that will require a proactive dialogue.

According to the President of Congress, Antonio Alvarez Desanti “if the Government wants to start conversations on taxes, our number one rule is to approve the projects related to government expenditure. They need to be speeded up.”

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