President says that she is pleased by accord on new taxes

Ms. Chinchilla delivers her independence day talk before the Monumento Nacional that depicts filibuster William Walker being driven out by five women representing the Central American states. Photo: Casa Presidencial

President Laura Chinchilla described approval of her tax reform plan as a moral imperative in an independence day address.

“We have the moral obligation for a political accord, she said. The conditions that our sons and daughters will grow in demand it. This is the most important challenge of our democracy: a social accord for the sustainability of the public policies to take this last push toward a Costa Rica developed for its bicentennial.”

She spoke in Parque Nacional.

The president described Costa Rica’s level of taxes as below its level of development and said the country had the biggest financial deficit of 20 Latin American nations. She said she was pleased that others had recognized the situation.

That was an indirect reference to an agreement she and her political party, the Partido Liberación Nacional, has made with the Partido Acción Ciudadana, the Partido Accesibilidad Sin Exclusión and others to pass a revised tax package. She said she had renewed hope for a dialogue with opposition parties.

The president’s aides appear to have put together a coalition with 38 legislative votes, enough to pass a tax measure. The president’s team appears to have backed off some taxes, including those on educational tuitions at private institutions and for private medical services, to win support. Instrumental in the agreement was Ottón Solís of Acción Ciudadana.

The actually proposal will not be known until a proposed law is filed with the legislature. However Acción Ciudadana supports heavy taxes on high earners.

Some observers say that the party is seeking a global tax so that Costa Ricans and residents here will pay taxes on income worldwide in much the same way U.S. citizens do now. That will not sit well with expats.

There are nearly 20 adjustments that Acción Ciudadana seeks in the original Chinchilla tax plan. The president proposed a 14 percent value added tax to replace the 13 percent sales tax. The proposal was described in general terms in the legislature Wednesday.

Juan Carlos Mendoza Garcia, president of the Asamblea Legislativa, also is a member of Acción Ciudadana, He is fond of saying that a tax plan should take from those who have for those who do not.

Ms. Chinchilla said basically the same thing in her speech when she insisted that Costa Rica needs resources for the state to be able to execute what she called its redistributive function to insure the welfare and security of citizens in the future.

Costa Rica’s bicentennial is in 10 years. Wednesday night Ms. Chinchilla slammed past administrations for perpetrating what she said were little frauds on the public with fiscal manipulation. Of course, she has been a high member of some of these administrations. She was a justice minister, a security minster and a vice president under Óscar Arias Sánchez.

Thursday was a day for parades as well as speeches. Before her talk, Ms. Chinchilla watched the downtown San José parade made up mostly of schoolchildren. There were similar parades all over the country.

There were arrests in Alajuela, Heredia, Hatillo, Alajuelita, Guadalupe and Desamparados. Most of the anti-social behavior was fueled by illegal drugs and alcohol.

The Fuerza Pública said it had detained 70 persons who were rowdy at independence day activities. Police said that the allegations ranged from carrying a weapon illegally to domestic violence to drug possession.

Officers confiscated 100 grams of marijuana, nine doses of cocaine and nine crack rocks.

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