It has been pointed out that the solution to the financial debacle of the State of Costa Rica unavoidably involves rethinking the system of incentives and salaries of public officials.
Crhoy.com reports that "... economists and former ministers have said it's good that a containment of public expenditure be made, but if the current government and MPs really want to solve the budget deficit they must not stick only to the administrative unti but must also delve into the issue of public sector salaries."
In circulation is a "light" version of the tax plan that failed in the Costa Rican Legislative Assembly, which would impose VAT on a financial basis and not on physical incorporation.
Keeping the imposition of value added tax as a key factor in achieving an increase in tax revenues, the current draft of a new tax reform bill, is circulating clandestinely, due to the fact that the tax authorities’ priority is to improve external debt management by issuing Eurobonds and not domestic tax collections.
Representatives of public and private sectors in Guatemala are demanding the creation of a single process for import procedures, similar to that for exports.
Siglo21.com.gt notes that since in the country the “Ventanilla Unica” (single counter), also known as (VUPE) only works for exports, the director of Exporter Services, of the Guatemalan Association of Exporters (Agexport), Fernando Herrera, said there is a need to "create an Import Counter".
The relationship between public debt and production reached 44.7% in 2011, after three consecutive years of gains.
The relationship between public debt and production reached 44.7% in 2011, the third consecutive year to record an increase, according to a report by the Central Bank of Costa Rica issued in February, reported Nacion.com.
This will be the second consecutive year that Costa Rica has the highest fiscal deficit in the region.
The International Monetary Fund states that the difference between revenues and expenditures of the government of Costa Rica at the end of 2011 amounted to 5.6% of GDP. The Finance Minister Fernando Herrero said that this deficit is 5%.
Uncertainty about approval of the tax package in the National Assembly makes the national debt situation unsustainable.
The General Budget of the Republic for the Fiscal Year 2012 was presented by Finance Minister Fernando Herrero, who admitted that 45% of the $11,500 million to be financed will be provided by issuing public debt.
The treasury has issued 2% less bonds than planned, due to poor investor appetite for these securities.
In the first six months of the year, the Ministry of Finance intended to raise ¢975 billion ($ 1.933 billion) in the local market. However, poor demand for securities in national currency has forced the agency to aim for a figure slightly lower than projected.
The Costa Rican rice sector is demanding that the government increases the controls for rice entering from Nicaragua.
Doubts about the true origin of rice coming into the country have led Costa Rican rice growers to request a review of rules of origin for imports, suspecting that the grain is entering in a triangular fashion.
Meanwhile, in Nicaragua, a country where rice production is insufficient to meet domestic demand, export of the grain is almost nonexistent, leading to suspicions that the rice is coming from other countries on the isthmus and then being transported to Costa Rica.
The governments new proposal for tax reform will mean less funds will be collected compared to the original.
In order to get approval from Congress, who since the first version of the taxreform has blocked its passing, the Executive has submitted a newer version of the bill, which provides for a number of amendments requested by the opposition.
Interest earned on capital invested abroad will not accrue income tax.
The possibility of collecting this tax, as has been requested by some members of the opposition in Congress, will not become reality because it has not been considered in the tax reform presented by the government, and has even been dropped by the faction who originally made the request.
More government spending -> more debt -> more expensive credit and more taxes. The State continues to fatten at the expense of the productive sector.
Juan Carlos Hidalgo, in his blog at Elfinanciero.com, begins his article calling the 2011 budget approved by the Legislative Assembly as “illegal”. He explains that current expenditures are included as investments, which is specifically prohibited by the National Budget Law.
The Finance Minister began talks with political groups trying to identify a project with as much support as possible prior to presentation.
Fernando Herrero, minister of finance, stated to Aaron Sequeira of Prensalibre.cr that the basics of the first draft of the proposed tax reform is progressiveness and simplicity, with the Value Added Tax (VAT) and Income Tax as the main sources of revenue.
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