The Laura Chinchilla Miranda administration has done little to stop the increase in the national deficit and the country’s budget.
The Ministerio de Hacienda defends the lack of action by saying that the national budget is rigid. The administration has reduced the growth of the budget from 24 percent a year to 13 percent in 2011, the ministry reports. Next year, the proposed budget only increases less than 10 percent, it said.
The administration is putting all its hopes on passage of a new tax law that will suck more money from the productive sector to grow the budget.
Prior to any major tax proposal, Ms. Chinchilla should have taken some strong steps to increase current government income and reduce expenses. Of course, there has been an effort to increase collection and crack down on evasion. But that amounts to peanuts in the overall scheme.
With any tax increase, expats and those in the tourism business will see a negative effect. The country already sees a decrease in tourism, and not all of that is due to economic conditions elsewhere. Part of the problem is increases in taxes and increases in tourism industry pricing, in part because of government demands from employers.
Here are some suggestions for the president:
• Any pension higher than $2,500 a month should be cut to that amount. There are plenty of public employees who have received very generous retirements from the government. Some are perhaps too generous. Ms. Chinchilla says she seeks to take from those who have and give to those who do not. This is a start. Fully 40 percent of the national budget is salaries and pensions, said Hacienda.
• The practice of giving public employees an aguinaldo every Christmas should be stopped. Making employers pay bonuses without regard for production is silly. Distributing such bonuses for work not done in the public sector is, as Ebenezer Scrooge would say, “a poor excuse from picking a man’s pocket every 25th of December.” Perhaps there should be a show of solidarity by public employees who would surrender this year’s bonus in the interest of fiscal stability. Fat chance.
• The administration should start selling off some of the large buildings that are under utilized. Do officials even know what they own? The landscape shows that the Costa Rican economy is dominated by banks and public entities. Some of the finest buildings are public. Does the Contraloría de la República really need that gigantic tower in Sabana Sur? How much of
the La Uruca building of the Instituto Costarricense de Turismo really is in use?
• The administration should immediately seek a buyer for the Refinadora Costarricense de Petróleo S.A., the fuel monopoly. Some big oil company or perhaps the Chinese probably would be interested in the facilities but probably not the luxury building in Barrio Tournon. That could be sold separately.
• Dare we suggest that the country should sell off the national stadium that the Chinese were nice enough to construct? If you can’t keep a country out of the red, how can you be expected to make a profit from a stadium?
• Some Costa Rican laws that involve payments to the government specify where the cash should go. The Patronato Nacional de la Infancia, for example, gets a piece of the traffic speeding fines. There is no rationale for this except that some
lawmaker sought to reward the children’s agency. Hardly any of the speeding fines go to the central government. This law and others like it should be changed so that all money goes to the central treasury and is allocated by the central government based on needs and budget. The slush funds at the various agencies should be eliminated. A $15 entry tax on tourists may have generated $4.7 million this year based on the arrival of 312,659 tourists by air, but that cash goes to the tourism institute which does what with it?
• This newspaper already has suggested that the government inventory the land it holds and consider marketing excess.
• The government should consider a management plan for its vast holdings of public lands. Instead of treating trees as sacred, the valuable hardwood should be harvested to provide room for growth of younger trees. Concessions to do that would give a boost to the public income. Otherwise, trees just get old, die and fall down.
• This newspaper already has suggested that the Chinchilla administration get fully behind plans by a Canadian firm to mine gold in northern Costa Rica and plans by a Denver firm to explore for oil and gas. The severance tax and commissions on both commodities could be ample.
This newspaper’s opinion is that the Chinchilla administration should take immediate steps to lower its expenses and seek funds from resources before it seeks a single colon more from the working public. And Ms. Chinchilla has been around in public life far too long to complain that the financial problems are something she inherited. The problems are what she helped create in her years of public offices.