Tax Reform to Reduce Public Spending

In Costa Rica a new tax reform package includes an attempt to reduce state expenditures by 1% of GDP.

Tuesday, January 29, 2013

The Finance Minister Edgar Ayales, outlined to to the details of a new attempt to correct the deficiencies of the Costa Rican tax system, while curing the problems in public finances.

Ayales justifies the need for the approval of this tax reform, saying that "The short-term contingency measures that have alleviated the fiscal deficit have all been used up.”

The new project, to be presented to the Legislative Assembly in the second quarter of this year, aims to reduce state expenditures by 1% of gross domestic product (GDP) and increase revenue by 2%.

More on this topic

Guatemala: Government Expands Tax Reform

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Despite several announcements of new taxes, the government will focus on controlling tax evasion and leave the decision to implement a tax reform to future administrations.

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Costa Rica: Anti Tax Evasion Bill

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The new Solís administration plans to establish the Value Added Tax and demand proof of tax payment for procedures in public institutions and on application for bank loans.

The tax reform being prepared includes a bill to reform income tax. This is part of a project by the Ministry of Finance which includes 55 specific actions among which are changes in the area of ​​income, reducing government spending and control of state borrowing.

Costa Rica Announces Fiscal Consolidation Plan

October 2013

On top of the adoption of VAT, global migration tax, and global income tax already announced in previous plans, there is now a containment cost to be added through adjustments to the State payroll.

An article in reports that "The Ministry of Finance today released a discussion agenda which will later have to be submitted to the Legislative Assembly in the form of a draft tax reform which will, between cost savings and new revenue, generate 3.5 % of Gross Domestic Product (GDP) in five years. With this relief to public finances, the fiscal deficit would grow at rates that are more manageable than the 5% of the projected production for 2013. "

New Tax Reform Being Studied in Costa Rica

November 2012

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.