Lawmaker objects to pact that is pushing tax reform

The tax reform agreement between the president’s party, Partido Liberación Nacional, and the Partido Acción Cuidadana isn’t settling well among a few representatives in legislature, according to a vocal member who spoke Tuesday afternoon. The assembly leadership had to cut him off.

The single representative of the minority Partido Frente Amplio, José María Villalta Florez-Estrada, made his point loud and clear for more than half an hour, stating that the agreement between both parties has left his voice as a representative non-existent. Not just his, but the voice of other minority representatives as well, he said.

He was gone for two weeks, and when he came back, to his surprise there was a pact between the two parties that took away his right as a representative, he said. In order for him to bring an issue or a proposal to the full legislature, he would have to be part of the commission that deals with that subject. He is not.

“It’s disgusting! This is a disgust to government,” Villalta said, waving his arms to his fellow representatives.

He pointed to the president and the vice-president of the Asamblea Legislativa and said they should be ashamed of their actions. According to the new rules, each representative will only be allowed to discuss the 86-paged budget reform for 10 minutes.

“How do you expect us to sum up 86 pages in 10 minutes?” he asked. “This is a joke.”

The president is Juan Carlos Mendoza García of Acción Ciudadana.

Lawmakers voted to put the measure on the so-called fast track for quick passage while Villalta was gone.

The angry representative was warned on various occasions about his allotted time running out. He said he didn’t care because he demands transparency amongst the representatives and they need to hear what he has to say. His microphone was turned off.

“This is the most anti-democratic thing I’ve seen in my life,” he said as he shook his head and looked at his agenda.

The two political parties and a few other lawmakers agreed on a text of a new tax package, and a commission has been formed to study it. The fast track rules restrict debate in the assembly when the package arrives there.

Earlier Tuesday Fernando Herrero Acosta, the finance minister, was before the new Comisión Especial de Solidaridad Tributaria that is studying the proposed tax reforms.

He explained that the global tax (renta global) would lump all the income anywhere of a Costa Rican or a resident here for purposes of setting a tax rate and that the world tax (renta mundial) is a levy on income generated outside Costa Rica for persons living here.

He explained to the committee that the tax on corporations would be 30 percent. He also noted that the 14 percent value-added tax would be reduced to 2 percent for private education and health services.

The tax plan also increased by a half percent the tax on transferring property valued more than 50 million colons or a bit less than $100,000 at the current exchange rate.

The tax on transferring a vehicle also increases from 3 percent from the current 2.5, he said.

The government also is seeking a stiff tax on luxury vehicles. Herrero said that vehicles worth more than 57 million colons or about $110,000 would pay this tax. The tax has been reported to be 50 percent.

Herrero also discussed the government’s plan to begin taxing companies that are now located in the various free zones. The tax is controversial and would be 15 percent beginning in 2015, according to the proposal.

The country now has a 13 percent sales tax. But a value-added tax generates more income because a tax is assessed at every stage of production. There also is less opportunity for people making products on which the tax is assessed to evade taxes because the individual or company that sold the raw materials would be reporting and paying part of the tax as would the individual or firm purchasing the product. The end user would, of course, find the entire amount included in the retail price.

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