Despite survey results, government defends tax plan

A necessary project, said the pro-tax Web page.

According to the central government it is common that a tax increase generates predominately negative reactions among the public.

That was the essence of the response to a survey that said that three quarters of the public opposes President Laura Chinchilla’s tax plan. The Spanish-language daily La Nación contracted with Unimer to survey public views on the tax proposal which still is in the legislature.

Casa Presidencial was quick to respond and pointed out that 70 percent of the new taxes will be paid by the top 20 percent income earners.

Casa Presidencial noted that the government has put up a special Web page that promotes the tax plan. It is The Web page repeats the same claims. And it also contains a link to the text of the tax proposal and a summary.

The Web Page tends to discount any serious effects on the average Costa Rican. The tax would tax about $500 million out of private hands.

The proposed value-added tax is efficient and used in the more developed countries for years, said the text. The Web page says that Costa Ricans will pay just 14 percent instead of the current 13 percent.

However, the Web page does not say that the value-added tax will include many more financial transactions, like visits to professionals such as lawyers, accountants, private physicians and private dentists. Generally such taxes raise much more money than a simple sales tax.

The Web page also says that this tax only will be charged on commissions that banks assess to withdraw money via automatic tellers. An early incorrect claim was that the government would tax the withdrawal. If the bank does not charge a commission, there will be no tax, the Web page says. Of course, state banks do not charge a commission on automatic teller withdrawals by their customers. But expats who take money from their accounts in the countries usually face fees up to $3.50. So they would pay 49 U.S. cents more.

The exchange of money, such as dollars for colons, will not be taxed, it says.

The tax reform will guarantee the sustainability of public polices, especially those that are directed to the most vulnerable sector of the population, said the Web page. The Web page likens the current financial situation of the county to that of a household where the outgo is more than the income. The result is more debt, it notes. About half the current national budget is financed with debt.

The Web page brags that 233 products used by the bulk of the citizenry will not be taxed.

The Web page also says that tax collection is up and that evasion is being controlled by a lottery to promote the use of credit cards and by visits to companies to check on tax payments. Merchants are less likely to cheat on remitting tax from credit card purchasers because there is a paper trail.

The governmental claims are not always totally candid. The Ministerio de Hacienda where the tax-collecting Tributación is located, said this month that income from the luxury home tax was up 19.03 percent when compared to the year before. The government collected nearly 2 billion colons by Jan. 16, it said. That is about $3.96 million. However, a check of the records shows that this amount is just 10 million colons higher than the 2010 total of 1.99 billion colons or about $3.94 million.

Collections took a $612,000 plunge in 2011, the year to which the ministry made the comparison.

The tax proposal also would increase the transfer tax on real estate valued at more than 50 million colons or about $99,100.

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