A proposal has been made to raise the "Marchamo" (vehicle ownership tax) and selective consumption tax on vehicles in order to finance the construction of the modern train system which the Solis administration insists on implementing.
Despite the fact that last year proposals very similar to this were rejected in the Legislative Assembly, the Solis administration insists on raising funds to finance the construction of a modern train for the Greater Metropolitan Area.
Costa Rican business leaders have expressed their dismay at the executive branch's apparent contradictions regarding the proposed agreement on fiscal issues and the strike threats made by public unions.
From a statement issued by the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP):
Private Sector puzzled by attitude of the Executive Branch
The President of the IADB has advised Costa Rica to make a tax reform to raise taxes arguing that today the teetotum indicates "everyone gives".
EDITORIAL
The use of the old fashioned game of a faceted spinner by the head of the hemispheric institution as example, deserves to have the whole story told: the person who spun the teetotum was the Costa Rican government, the same participant of the "game" who on their previous turn benefited from the teetotum when it landed showing "TAKE ALL". Luis Alberto Moreno is saying that the serious fiscal crisis which the country now finds itself in means that now everyone must contribute to its solution. That means aproving more taxes.
A bill to improve the fight against tax fraud authorizes the tax authorities to seize the assets and bank accounts of delinquent taxpayers, without a warrant from a judge.
An article in Nacion.com reports that the Technical Services Department of the Legislative Assembly has proposed a rule that "... could affect property rights and the privacy of individuals because it would allow Taxation officials to take possession of any money deposited in bank accounts, income from salaries and pensions. " and all this "... without a warrant, the Tax Administration would be able to seize assets and enter business establishments."
The Ministry of Finance has announced the sending to the Legislative Assembly of a bill which eliminates 220 different tax exemptions.
The bill already has the signature of the president, Luis Guillermo Solis, and besides eliminating 220 tax breaks also establishes penalties for those who enjoy them without a right to do so.
Fitch Ratings is warning that political fragmentation faced by the new government makes correcting the fiscal problem affecting the country very difficult.
The rating agency also highlighted as an issue the fact that "it is not yet fully clear how President-elect Solis will address the fiscal problem."
"The fiscal deterioration involves challenges in stabilizing the budgetary burden and the ability of authorities to respond to external shocks that may come in the future, which could erode the business climate and consumer confidence."
The main political parties running in the upcoming presidential and legislative election point to the need for tax reform.
Johnny Araya, candidate for the Partido Liberación Nacional, believes what should be done is to "create a National Tax Agency (NTA), to improve collection, as a decentralized agency of the Treasury, with a special procurement regime.