The libertarian party came out with its own tax reform package Monday with the emphasis on improving tax collection. The political party also said it sought a constitutional amendment to prevent the executive branch from paying current expenses with borrowed money.
Costa Rica’s financial situation is in trouble with tax collections estimated to be just 64 percent, according to the Contraloríaa General de la Republica. Another estimate said that the country fails to collect about $1 billion each year.
That is why the national budget is financed heavily by borrowing, a situation everyone agrees cannot be sustained.
The Partido Movimiento Libertario is the political group farthest to the right in the Asamblea Legislativa.
Lawmakers in a press conference said that President Laura Chinchilla had withdrawn her tax package to restructure it with the help of government and non-government advisers.
Ms. Chinchilla sought a 14 percent value-added tax as well as changes in the law to extend the tax to many items not covered by the current 13 percent sales taxes. These included visits to private doctors and dentists, rents, professional services and even tuition at private schools.
Danilo Cubero Corrales, head of the party in the legislature, said that more tax would generate less money in the pockets and increase poverty, cause less investments, less savings and would make Costa Rica less competitive.
The political party proposed strengthening property rights, a simplification of approval procedures, the constitutional amendment and a complete overhaul of the national budget.