Less Spending, Tax Evasion Control and Tax Reform

Costa Rica's government announced the measures it intends to implement in order to deal with growing government spending and improve public finances.

Wednesday, January 12, 2011


The press release from the Ministry of Finance highlights the three pillars of the measures and the actions to undertake in each of them:

1. Control of public spending
• No additional hiring or use of current vacancies
• Reduction of 20% of expenditures authorized in the nation´s budget for 2011
• Optimization of government purchase systems
• Explicit tax expenditures
• Identify unfunded costs generated by decisions of the Legislature

2. More and better tax evasion control
• Increase of 20% of Extended Control Actions
• Increase by 20% in Intensive Control Actions
• Strengthening in resolution of pending cases at all instances, exhaustion of administrative remedies so to firmly declare debts liquid and payable
• Integration of efforts with the Attorney General's Office to reduce levels of impunity in cases of criminal charges for tax evasion
• Encourage use of credit cards and debit transactions
• Reference values for sectors of sensitive goods
• Improvement and extension of the simplified system model

3. Legal reform to seek tax equity and solidarity (tax reform).

More on this topic

Costa Rica: Public Spending Up 18%, Revenue 5%

June 2010

In the first five months of 2010, the fiscal deficit was $670 million, 86% more than the same period of 2009.

An article in Nacion.com notes that “the deficit accounted for 1.93% of the country’s production. The Treasury expects the deficit to represent 4.8% of the GDP by the end of the year”.

Fiscal Deficit Continues to Increase in Costa Rica

May 2011

The fiscal deficit increased by 26.5% in the first 4 months of the year and has reached $733.3 million.

The amount is equivalent to 1.8% of Gross Domestic Product (GDP). In the same period in 2010, the amount was $579.8 million.

"We are seeing a larger financial deficit than the previous year in terms of GDP, which is consistent with the current projection that the deficit in 2011 would exceed 5% of GDP, " said the Finance Minister in office, Randall Garcia in an article publishes by ADN.es, "He reiterated the need for the country to adopt a tax reform ..."

Fiscal Deficit Continues to Grow in Costa Rica

August 2011

In July, the difference between total revenue and expenditure was $87 million. The deficit does not include interest expenses, which amount to $527 million a year, 17.7% more than recorded in July 2010.

A press release by ALDESA reads:

“The July figures for revenues and expenditures by the Central Government are not very encouraging and continue to show the existence of harmful primary deficit.

Costa Rica: Fiscal Figures - September 2016

October 2016

Although the growth rate of government expenditure has slowed, it is above inflation, while rising incomes have allowed for a reduction of the fiscal deficit compared to last year.

From a statement issued by the Ministry of Finance:

A reduction of ¢168,742 million in the financial deficit (revenues minus expenses), and a difference of seven percentage points between increased income and expenses, are the fiscal figures for the Central Government recorded with just three months to go until the end of the year.

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