Rapid legislative action sought for new tax plan

Usually slow lawmakers are asked to speed up.

Legislators voted Tuesday to put the new tax plan presented that morning on a fast tract to passage.

Some 43 lawmakers voted in favor of that plan which mainly limits the time each member of the Asamblea Legislativa can speak on individual amendments.

The proposal still is basically hearsay because no copies have been released. The document will be published in the La Gaceta official newspaper.

Casa Presidential praised the vote by the 43 lawmakers. The coalition that supports the bill includes legislators from the Partido Liberación Nacional, the Partido Acción Ciudadana and the Partido Accesibilidad sin Exclusion, Two independent lawmakers also support the plan.

Casa Presidencial hopes that the measure will be passed in December. It called placing the measure on the vía rápida a great first step. Basically the fast track prevents filibustering during which lawmakers can talk as long as they wish.

Carlos Ricardo Benavides, the minister of the Presidencia, said that Casa Presidencial would bring forth other reforms that the country requires because of the support shown by legislators.

The new plan is believed to increase the number of items that are not taxed. These are basic commodities that Acción Ciudadana sought to be exempted.

Of particular concern for foreign companies is a proposal to begin taxing firms that have located in the so-called free zones.

Expats are wary of plans to tax the global income of citizens and residents here. Many U.S. citizens have pensions that come from the north, but these already are taxed in the country where they originated, so there probably will not be additional tax owed here. A greater concern is the fact that expats will have to report that income, thereby letting persons in Costa Rica know about their holdings up north.

The new tax plan is believed to still include a proposal for a 14 percent value-added tax that would bring in much more money than the current 13 percent sales tax.

Casa Presidencial has to promise to provide 2 percent of the gross domestic product to education to win support from some of the lawmakers. This is the Chinchilla administration’s third attempt to get a tax plan passed. The national budget is about half borrowed money.

Meanwhile lawmakers continue to discuss the proposal to tax corporations about $320 a year. The measure, which passed on initial reading, went back to committee for possible revisions. The Sala IV constitutional court said last week that it did not find any legal impediments in the law. One lawmaker, Luis Fishman, said Tuesday that the government should take steps to make available the estimated $20 million it holds in confiscated property mainly linked to drugs. He said officials say that the goods cannot be sold while there has not yet been a declaration of guilty in the individual criminal cases.

The Asociación Nacional de Empleados Públicos y Privados came out with its own 14-point plan Tuesday and it would present its proposals to the legislative commission that is being set up to study the tax package.

Among other suggestions was that those who report tax evasion should get a percentage of the money collected.

The union also wants a one-time tax on the holdings of the rich and a one or two-time special tax on luxury consumption. It also wants to tax money earned outside Costa Rican and brought back here.

The union also supports the so-called Tobin tax that takes a bite from financial transactions. The union also proposed a fund to give money to those who are deeply in debt.

Some of these ideas might end up in the final tax bill because the union has political weight.

The president’s proposal already is believed to assess an extra tax on luxury cars. Experiences in the United States show that such taxes usually result in the reduction of jobs, such as that of auto salesmen because the wealthy retrench. A luxury tax on yachts during the Nixon administration basically destroyed firms that built the boats.

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