The ICEFI highlighted the achievement in reducing the fiscal deficit, but noted "weaknesses in access to information and opacity in the management of public resources."
From a statement issued by the ICEFI:
The Icefi is concerned about the tax changes in recent years because part of its impact is an increase in the regressivity of the tax system, less fiscal space for social spending, as well as a latent opacity in the discussion on the use of State property and new fiscal institutions.These negative effects detract from the achievements made in terms of macro-fiscal stability in the medium term, we warn, this will increase democratic ungovernability, public distrust and restrict the scope for sustainable, sustained and inclusive economic growth.
Without setting a date for a new proposal, the Executive has asked Congress to return the controversial bill.
After receivingcriticism because of the absence of reforms in the control and transparency of public expenditure, the Executive has requested the withdrawal from discussion in Congress of the tax reform bill, which aimed, among other things, to raise tax on the distribution of cement, mining and fuels.
The countries facing the greatest risk of fiscal unsustainability within three years are El Salvador and Honduras, followed by Costa Rica and with less risk, Nicaragua and Panama.
From the "EconomicOutlook"section of the V Report on the State of the Region 2016:
The tax reforms proposed by the Morales administration could include a new tax on telephony and increases in taxes on cement, hydropower and alcoholic beverages.
The amounts and characteristics of the taxes are still unknown, but at a meeting between representatives of Congress and the Executive Branch details were given on the productive activities that are included in the government proposal.
The organization says there is an urgent need to raise revenue and reduce expenses, "including the public sector wage bill, which is growing rapidly."
The report "Economic assessment of Costa Rica 2016" by the Organisation for Economic Co-operation and Development (OECD) highlights the fiscal problem as the main challenge for the country on its way towards accession to the bloc.
Main challenges and key recommendations for 2016-17:
Challenge: Tax revenues are low and spending is increasing rapidly, pushing public debt to high levels.Public administration is highly fragmented and the Ministry of the Treasury has limited control of the total public expenditure.
Recommendation: Reducing the central government deficit by 2% of GDP during 2016-17 and then an additional 1.5%, approving and implementing the proposed tax reform, combating tax evasion, removing tax exemptions that have no economic or social justification, and containing expenditure growth. Introducing a medium-term fiscal framework with a clear and verifiable rule for expenses. Improving efficiency in public spending by strengthening the authority of the Ministry of Finance to control overall public sector spending and introducing a results-based budget.
From 2014 to 2015 the size of central governments remained constant at an average 18.5% of gross domestic product (GDP).
From the introduction of the report: "Macrofiscal Profiles: 6th Edition" by the Central American Institute for Fiscal Studies (Icefi):
2015 proved to be a period of low tax advance for the Central American region. On average, the size of central governments remained constant compared to 2014, at 18.5% of gross domestic product (GDP). However, not all nations maintained this trend in the same way. While the governments of Nicaragua, Costa Rica and El Salvador, some of the largest fiscally in the region, continued to increase their participation in the economy, reporting increases of 1.5, 0.7 and 0.7% of GDP, respectively, the Government of Guatemala - one of the smallest in the world became even smaller, being reduced by 1.2% of GDP. For its part, the Government of Honduras reported a small decrease of 0.2% of GDP, fully converged with its policy of fiscal austerity, while that of Panama had a transient contraction of 1.4%, reflecting a reorganization established by the new administration and that, according to the plans for 2016, will be reversed in full.
As in old fashioned patriarchal homes, if there must be suffering, the first to suffer are the stepchildren, and only afterwards, if necessary, the legitimate children.
EDITORIAL
The announcement by the Solis administration that it has a plan B in case it does not manage to get legislative approval for the proposed tax increases designed to address the serious and growing fiscal deficit, highlights the existence in Costa Rica of first class citizens and second class citizens.
Completing reform of the tax authority, reducing smuggling and reforming the Tax Code are the basis of the proposal by the Association for Research and Social Studies.
From a statement issued by the Association for Research and Social Studies (ASIES):
Given the delicate situation of uncertainty and lack of direction found in Guatemala, ASIES believes it is part of its responsibility as a research center, to provide information to address the country's most critical problems. Therefore, in a press conference, the Board presented proposals for urgent action on economic, political, justice, social and environmental issues.
Central government, state unions, managers of public enterprises, deputies, supreme judges, all are being held in the deadly embrace of privileges while they drag Costa Rica over a cliff.
EDITORIAL
As long as the compensation system that excessively rewards state employees, regardless of their actual performance, is maintained, and the tax system is not reformed, fiscal problems will get worse.
After the dollarization in 2001 "... fiscal policy became the only tool the state could use to promote economic growth and improve living conditions for the population."
From a statement issued by the Central Institute for Fiscal Studies (Icefi):
Icefi reiterates the need for comprehensive tax reform
El Salvador, Tuesday, February 16, 2016
El Salvador - The Central American Institute for Fiscal Studies (Icefi), believes that El Salvador must seek political agreements that will pave the way for a comprehensive tax reform that addresses not only the solvency of the pension system, but the challenges in social welfare and the search for sustainable economic growth in the medium and long term.
The organization has once again supported the initiative that the Costa Rican government has control over the register of shareholders of companies classified as large taxpayers.
"The state must have in its hands information on the shareholders of companies and where dividends go to. In a democracy like this it is very difficult to understand how, who and why people can oppose the state having that information, " said the secretary general of the Organisation for Economic Co-operation and Development (OECD) Angel Gurria to Nacion.com.
The agency has changed the outlook from stable to negative, warning that there is still a lack a political consensus for approving a fiscal adjustment to reduce costs and improve the debt / GDP ratio.
The lack of political consensus to reduce the fiscal deficit will continue to put pressure on the government's rising debt burden.
An announcement from Moody's confirms the limited room for maneuver left to the country when obtaining external financing, compromising access to credit for the private sector.
Costa Rica has received a new warning over a possible lack of access to funds in the international market with which to alleviate its growing fiscal deficit. After China's decision not to buy $1 billion in bonds , the rating agency Moody's anticipates a rise in interest rates in the country and a deterioration of credit and growth.
In the opinion of the Central American Institute of Fiscal Studies, the only way to consolidate public finances in a sustainable way is to reduce tax breaks and increase tax collections.
From a statement issued by the Central Institute for Fiscal Studies (Icefi):
The Central American Institute for Fiscal Studies (Icefi) has proposed as a fiscal agenda for development: meeting the public demand for integrity and transparency; effective, efficient and effectual public spending as a tool for inclusive and democratic development; and financial viability with taxation being part of democratic accountability.
In Costa Rica the private sector claims that the Ministry of Finance is not telling the truth when it there is an essential need to create a register of shareholders under its control in order to comply with the OECD.
From a statement issued by the Costa Rican Union of Chambers and Associations of Private Business Sector (UCCAEP):