The representatives of the Supreme Court of Justice of Costa Rica are more concerned with defending their unacceptable privileges than with performing impartially and morally the work for which they were appointed.
EDITORIAL
Arguing that the Tax Reform approved in the first debate in the Congress imposes spending containment measures on the salaries of the Judiciary, the judges of the Supreme Court of Justice announced that they will oppose the reform if the points that affect the operation of the institutions of the Judiciary, in their opinion, are not abolished from it.
The business sector welcomes the progress achieved with the tax reform approval in the first debate, but notes that it does not fully solve the financial problems facing the government.
In the debate last Friday, the representatives approved the file number 20.580, known as the tax reform law. The approval was optimistically received by the Costa Rican Union of Chambers and Associations of Private Business Sector (Uccaep).
The Central Bank explained that the short-term loan of almost $870 million to the Ministry of Finance will have no impact on inflation.
From a statement issued by the Central Bank of Costa Rica:
September 25, 2018.In accordance with what is authorized by Costa Rican legislation, the Board of Directors of the Central Bank of Costa Rica (BCCR) agreed, on Tuesday, September 25, 2018, to the acquisition of Treasury Notes, issuedby the Ministry of Finance, for an amount of ¢498,858.8 million.
The country's Assembly has agreed to prepare a reform of the Budget Law to use the resources in the Citizen Security Plan.
The institution reported that the resources to be incorporated come from funds pending from the special contributions of the second quarter and from the funds collected in the last quarter, with total resources to be distributed amounting to $22,822,950.
Entrepreneurs in Costa Rica are warning of the negative impact of not maintaining, in the new law of public finances, the VAT exemption on local purchases of goods and services carried out by free zone companies.
The Association of Free Trade Zone Companies of Costa Rica (Azofras) points out that in the bill to strengthen public finances that is being discussed in the Assembly, motion 302 was not revised, a motion which aims to keep the VAT exemption on the local purchases of goods and services carried out by free zone companies, both to be incorporated into export products and for their operations.Currently the sales tax exemption applies.
The uncertainty about the future of the tax reform that is being discussed in the Assembly is the main reason behind the decline in consumer confidence in Costa Rica.
The Consumer Confidence Index (CCI) calculated by the University of Costa Rica (UCR) shows a reduction of close to 10 points between the months of June and August.
In Costa Rica, the private sector is recommending that the Alvarado administration implement effective measures to reactivate the national economy and a plan to recover the country's competitiveness.
Entrepreneurs are not very optimistic about the development of their businesses in the coming months, since when comparing the business confidence indicator of today (6.2) with that of a year ago (6.4) it can be seen that it is at the same level as twelve months ago.
Food companies in Costa Rica say that eliminating VAT from the basic basket in the tax reform proposal would create an incentive for imported foods, over and above local production.
The Costa Rican Chamber of the Food Industry (Cacia) reacted to the decision of the deputies to exempt VAT of 1% and 2% on the products of the basic basket in the Bill of Strengthening of Public Finances, which is being discussed in the Assembly.
Leaving out VAT on private education and the basic basket, the substitute text of the bill to Strengthen Public Finances was approved in the legislative committee.
The controversial substitute text of the Bill Strengthening Public Finance that has already passed the first filter, and may now be analyzed by the Plenary of the Assembly, left out two of the taxes that the Alvarado administration intended to implement in its plan: VAT of 1% and 2% on products in the basic basket and 2% on private education services.
The high level of financing and the economic slowdown explain the increase in the fiscal deficit of the central government, which at the end of July reached 3.3% of GDP, the highest in the last six years.
The decrease in tax revenues, due to a slowdown in economic activity, added to the high level of government debt, explained the strong rebound in the fiscal deficit in the first half of the year.Of the total deficit, about two thirds correspond to interest.
The new tax reform proposal being discussed in Costa Rica raises capital gains tax from 8% to 15%, and also excludes recognising as a debt deposits made by issuers in the securities market.
In the view of the National Stock Exchange (BNV), not recognizing deposits made in the stock market as debt leaves it at a clear disadvantage, compared to banks, as a source of financing for companies.Not only does it compromise access to investors' savings, it also significantly limits companies and individuals investment options.
The proposal to increase the tax on interest on financial investments in Costa Rica could eventually make credit more expensive for both the private sector and the government.
In the view of the National Securities Exchange (BNV) it is worrisome that initiatives such as an increase in tax on income from financial investments are being discussed without knowing in detail and clearly the impact that something like this could have on the stock market and the country's financial activities.
The cost of not making decisions about the serious fiscal problem affecting Costa Rica "is incommensurable and has the potential to affect not only the economic but also the social and democratic order of the country."
This is the emphatic and clear position of the Comptroller General of the Republic of Costa Rica regarding the serious and risky situation in which the public finances of the country find themselves.Furthermore, as is well mentioned in the report "Fiscal and Budgetary Evolution I semester 2018", published recently by the institution, if decisions related to solving problems of short-term liquidity and modifying the structure of public expenditure to the medium and long term continue to be delayed, the cost to the country will be much more than just economic.
Businessmen in Costa Rica recognize the importance of the fiscal reform needed by the country, but they are calling on the Alvarado administration to pay attention to equally complex problems, such as unemployment and high production costs.
The business sector has taken stock of the first 100 days of the government of Carlos Alvarado, and in a discussion outlined the urgent challenges facing the country, such as how to achieve economic reactivation, advancing a proposed teleworking law, promoting dual training and investing in improving road infrastructure.
The new tax reform proposal presented by the Ministry of Finance of Costa Rica includes the creation of a global income system to impose and collect a tax on the profits of companies and individuals.
Taxing all of the profits of natural and legal persons, including those currently paid separately by the identity code income method, is the principal new feature of the new tax reform plan presented by the Ministry of Finance.