In the midst of Nicaragua's political and economic crisis, the National Assembly approved a tax reform that increases the income tax of large taxpayers from 1% to 3%.
On the morning of February 27th, the reform of the Tax Concentration Law was approved, which also contemplates raising from 1% to 2% the income tax for medium sized companies with higher incomes.
And apparently for bureaucracies in general, including those of international organizations; an "expert" from the Inter-American Development Bank is supporting tax reform in Costa Rica.
Although officially the IDB "does not advocate a tax burden or specific tax policy," one of its officials warmly supports the project to increase the tax burden to support the Costa Rican economy, to the point of suggesting that the tax burden be similar to Argentina’s.
2010 will be a difficult year for the region's Treasuries, and tax reforms will be one of the weapons used by governments to fight this crisis.
Nicaragua has recently passed a highly controversial fiscal reform. Panama approved tax hikes for companies in the Colón Free Zone, as well as tobacco, casinos and insurance companies. In Guatemala the government proposed a tax reform to increase the tax burden, which includes raising income tax from 5% to 6% and taxing mobile communications. The Salvadoran government intends to raise taxes to alcoholic beverages, tobacco, weapons and ammunition, as well as vehicle registration and commissions at insurance companies.
"If we want first-world services, we must pay first-world taxes" - Laura Chinchilla.
The tax burden in Central America hovers between Guatemala's 9.9% and Nicaragua's 17%. In Brazil its 29%, whereas Scandinavian countries have tax burdens around 40%.
Tax collection has been hardly hit by the economic crisis, making evident the need for fiscal reforms to solve the structural problems of the region's tax systems.