The fiscal consolidation document presented by the Ministry of Finance of Costa Rica proposes considering surplus capital distributed by cooperatives and solidarity associations as passive income.
"Capital passive income, is, for example, dividends, mutual funds and bank deposits, among other things, which currently have different rates. The initiative proposes a single rate of tax for them. "
The tax system in Costa Rica is chaotic, complex, unfair, disproportionate, inequitable, and ineffective, which affects development and competitiveness, encouraging tax evasion and smuggling.
In an analysis piece in Elfinancierocr.com items, Danilo Villalta notes the need for comprehensive reform of the Costa Rican tax system, starting with a "strategic planning process" to approve a plan "agreed with the various political forces, and subsequently according to that plan, develop bills with the participation of specialists in order to have legislation that is clear, transparent, simple and easy to apply by the administrator and the taxpayer. "
If passed the new reform would create taxes for financial transactions, unproductive properties and newspapers.
Elsalvador.com reports that Carlos Caceres, head of the Ministry of Finance stated that "The President (of the Republic) has instructed the Ministry to evaluate a proposal acceptable to him and to society, that is politically acceptable and not damaging to the productive sectors and to the poorest people. "
The Sala IV has rejected the tax reform bill that was approved in the first instance in Congress, citing procedure errors in the legislative treatment.
The court decision means, in principle, that the bill that the government calls the "Solidarity Tax" will be returned for consideration by congressional representatives and it will therefore be at least another four months before it can be approved.
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.
The Constitutional Court has endorsed a tax on corporations, which had been sent for review by opposition legislators.
Now the bill must go to a second debate, in order to be formally approved.
The annual tax of $300 applies to active corporations, inactive companies must pay half the amount. In turn, micro and small businesses are exempt from tax.
The coffee sector has announced its opposition to a proposal to establish a 5% surcharge on Income Tax (ISR in Spanish) for the agricultural sector.
A press release by Anacafé states:
The Guatemalan coffee industry via the National Coffee Association, Anacafe, has expressed concern about the establishment of a 5 percent surcharge on Income Tax,, referred to in the draft Anti-Evasion Act II which is now being considered in the Congress of the Republic. Political parties in their current campaigns have said that they will not raise taxes, their representatives in the legislative body have already made agreements to approve them.
Electricity consumption of over 100 kW will be incur a tax of 1.75%, which will be go towards financing the operations of the Fire Department.
The annual amount raised would be about $15 million, which would be invested in the construction of 30 stations in towns that currently lack them.
The money collected from the tax, according to the project approved in the plenary with 50 votes, will be sent directly to the coffers of the Fire Department.
The government has reiterated that the new tax on corporate bodies, approved in first debate in Congress, does not apply to Micro and Small Enterprises.
The new statements come in the face of recent criticism of the bill, by some opposition representatives.
The proposal, which intends to charge a tax of $300 for corporate bodies registered as active and a $150 for those who are non active, and was approved in first reading in the Legislative Assembly and is currently being debated in the Constitutional Court.
The libertarian movement has asked the Constitutional Court to review the proposed tax on legal persons.
This request will mean a delay, of at least 30 days, in the eventual adoption of the tax which the government intends to use to raise revenue to fund security programs.
The proposal, which intends to charge a tax of $300 for legal persons actively registered and $150 to those with inactive status, is part of the tax reforms that Laura Chinchilla’s Government have sent to the Legislative Assembly for discussion and approval.
While other Central American countries are preparing taxes to combat insecurity, Nicaragua declares that it is not an appropriate option.
The president of Guatemala, Alvaro Colom, proposed to his peers in the isthmus region the creation of specific tax to combat organized crime and the violence it generates.
Although the proposal didn’t prosper at the meeting of the Council of Finance Ministers and Central Finance, both Costa Rica, El Salvador and Honduras are working on the implementation of a national tax for their own security plans.
A new security tax, which aims to raise $80 million, calls into question a $300 million investment and could result in the loss of 15,000 jobs.
This is according to Jesus Canahuati, Honduran business leader and former president of the Honduran Maquila Association, who added that "several investors who were ready to come to the country have now halted their plans," due to uncertainty generated by the new tax.
Based on prior evidence, the much needed fiscal reform in Costa Rica may take a year and a half to become a reality.
The country experienced a fiscal deficit of $997 million in the first 8 months of this year, 70% more than the same period of 2009.
The approval of the fiscal reform promoted by the Chinchilla administration could become a very long process, taking between 10 and 44 months, according to experts.
Analysis is underway to charge a specific tax on mobile telephony in 2010, either to all calls or just international ones.
A 0.1 Quetzal per minute tax (approximately $0.01), is one option being considered to increase fiscal revenues, within the National Emergency and Economic Recovery Program, know for its initials as PNERE.
Marco Cerezo Blandón, PNERE coordinator, "states that one of the objectives of the program for 2010 is fiscal sustainability", reports Sigloxxi.com. "To achieve this 'a Q0.10 per minute tax to mobile calls is being considered' said Cerezo, as well as other mechanisms to raise the state's revenues".