Costa Rica: NO to VAT Increase and YES to Lower Public Spending

The productive sectors are pointing out the negative effects of the planned increase from 13% to 15% in Value Added Tax, and insist on the need to resolve the fiscal problem by cutting state spending.

Tuesday, November 18, 2014

According to representatives of the productive sector, an increase in Value Added Tax (VAT) will have a negative effect on the economy. For the food industry, the 15% rise could result in the closure of production plants and an increase in informality among businesses.

José Manuel Hernando, president of the Costa Rican Chamber of the Food Industry, told Elfinancierocr.com that "... a review is needed of expenses as a first step before considering whether an increase in the fee is needed. This is not about protesting for protesting's sake. They must pass reforms that solve the structural problems on the expenditure side, where the main cause of budget shortages are to be found."

Meanwhile, Pablo Abarca, president of the National Chamber of Tourism, said that "... The industry has contracts that are at least two years long, therefore the idea is to impact tourism entrepreneurs less and allow us to have a greater margin for negotiating with suppliers. If they make this increase they put us in a difficult situation and and we do not understand it because with with the tax base they have they already have the solution."

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