Tax package expected to go to lawmakers today

Central government officials are meeting with members of opposition parties in an effort to sell the Chinchilla administration’s tax plans.

Today is the day when the tax package is supposed to go to the legislature. Marco Vargas, minister of the Presidencia, and Francisco Herrero, the minister of Hacienda, met last week with lawmakers from Acción Ciudadana, Accesibilidad sin Exclusión, Renovación Costarricense, Restauración Nacional and Movimiento Libertario at Casa Presidential.

Today President Laura Chinchilla will meet for lunch with lawmakers from the government party, Liberación Nacional.

Liberación has 24 lawmakers in the 57-seat legislature. A majority to pass any bill is 29. Measures that require a two-thirds vote would need 38 lawmakers. So it is clear that the Chinchilla administration will have to knit together some allies to pass any new taxes.

As sweetener, each lawmaker will be getting a new car when they return to work today.

Ms. Chinchilla has promised to slash government spending and freeze any hiring in a prelude to the presentation of the new taxes. Still, the proposals are expected to generate sharp discussion. One Liberación lawmaker, a former minister, has threatened to quit because he disagrees with the administration’s approach.

The Costa Rican Constitution says that in no case may the amount of budgetary expenditures exceed that of probable revenues. However, Costa Rica has
been running deficits for years and borrowing money to fill the gaps.

Juan Carlos Hidalgo, a Costa Rican who is a Latin American expert with the Cato Institute, a conservative U.S. think tank, wrote a blistering criticism for La Nación. It was published Friday. He said that the new budget designed by the Chinchilla administration is 10 percent greater than the previous year.

He also said that many government agencies were obsolete and that Ms. Chinchilla froze hiring after putting on 5,000 new employees in December.

The proposed new taxes have been criticized from less conservative directions because they come at a time when the country is just pulling itself out of a steep recession.

The central government has 22 ministries including a Ministerio de Deporte or sports, which has not yet been fully approved.

The exact nature of the taxes have not been given, but a 15 percent value added tax is believed to be among the proposals. The new tax would cover many more transactions than the current 13 percent sales tax, thereby bringing more money into the government.

Ms. Chinchilla recently said she would like to assess a tax for national defense. Then there are possible taxes on casinos and sportsbooks and a $200 annual tax on corporations that already is in the legislative hopper.

The legislative process is a slow one, and lawmakers likely will take a long time to consider the tax proposals in committees.

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