Evasion disclosures jeopardize tax package approval

A.M. Costa Rica graphic The nation's opinion leaders

If public opinion matters, the president’s plan to impose a package of taxes is in deep trouble.

Revelations that large companies and also government officials have been dodging taxes have brought sharp rebukes from both La Nación and el Diario Extra, the two most influential daily newspapers.

The editorial positions followed revelations mostly in La Nación that government ministers had not filed declarations of value on real estate and then paid the resulting tax. Even worse, the finance minister, Fernando Herrero, resigned just as La Nación was reporting Tuesday morning that he and his wife failed to pay income tax on earnings of a private corporation. Then later Tuesday the same newspaper revealed that the chief tax collector, Franciso Villalobos Brenes also had a tax debt stemming from 2008.

The revelations gave support to the continued insistence by the nation’s public employees union that the solution to the country’s financial crisis was not more taxes. The union, the Asociación Nacional de Empleados Públicos y Privados, has been promoting for months better tax collection. Now the organization is saying “We told you so!”

“Reading the editorial opinions this date, Monday April 2, 2012, published by the newspapers Diario Extra and La Nación generated extreme satisfaction,” said the union on its Web site.

The actions of government officials undermined the moral authority to continue the fight for a reform, said La Nación, noting that it had supported the tax proposal by President Laura Chinchilla Miranda. As well as reforms to the tax code to better control evasion, the newspaper said it urged a modification of the tax culture in all levels of Costa Rican society.

That was an obvious jab at Herrero and the ministers as well as Ms. Chinchilla who initially dismissed the finance minister’s property tax undervaluations as a regrettable carelessness. That was before it became clear that Herrero was careless on more than one tax issue.

The finance minister, of course, was the man managing the administration’s effort to get new taxes passed in the legislature. Lawmakers already have approved the 14 percent value-added tax on first reading awaiting approval of the text by the Sala IV constitutional court.

El Diario Extra, in its editorial, said it was easier to slap more taxes that in the end are paid by the poor and the workers. It also cited revelations that 450 of the largest companies paid small amounts of taxes.

They are robbing progress, the future and development of a country,” the newspaper said.

El Diario Extra said that the director of Tributación Directa, Villalobos, had put on a bulletproof vest in the hunt for tax evaders and gave him encouragement.

That was a day before the tax problem of Villlaobos became public in La Nación Tuesday afternoon.

Channel 7 Teletica also has been critical of the tax evasion, and even the Roman Catholic Church checked in with a criticism of the tax reform plan in the 2012 pastoral letter emitted by the country’s bishops.

Ms.Chinchilla hopes to raise $500 million a year with the new taxes to reduce the country’s crushing international debt.

This entry was posted in Costa Rica News. Bookmark the permalink.