Costa Rica: Proposal to Tax Remittances Sent Abroad

Representatives of business associations have proposed ten measures to prevent the entry of speculative capital into the country and to provide flexibility to the exchange rate without local currency appreciating.

Friday, January 18, 2013

Elfinancierocr.com reports that "Business representatives this afternoon delivered a plan with 10 steps to curb the heavy influx of foreign capital", among which was "a tax on speculative capital inflows, in addition to promoting a specific tax on remittances sent abroad, of 5% for national banks and 5% for ‘suitcase’ banks".

Jaime Molina, president of UCCAEP stressed that the proposals are intended to preserve the jobs of thousands of Costa Ricans who work in the private sector. "This requires limiting inflows of capital that is not rooted in the country, as they put downward pressure on the exchange rate and cause inflation to rise which affects the competitiveness of the domestic industry".

The measures proposed to reduce interest rates in colones are "moral persuasion on the part of the government with financial institutions as an instrument of monetary policy, reducing the participation of the Ministry of Finance in the placement of domestic debt, preventing autonomous institutions take part in the auctions and setting a reasonable inflation target which does not put upward pressure on the interest rate as well as reducing and control public spending. "

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