Economic picture contains bright spots and concerns

The nation experienced a noticeable economic slowdown as lawmakers discussed the president’s massive tax proposal.

Now that the value-added tax has been shelved, a new proposal to tax sportsbooks and casinos has raised concern in the restaurant and rental sectors. They fear that some operations will leave Costa Rica to avoid the tax.

Still there is some good news for expats. Firms involve in the relocation business report increased inquires and business.

And the second tourist season has begun now that schools are on vacation in the north. There is an increase of young tourists.

Some casino owners will have to pay the government up to 8.5 million colons (more than $17,000) a month plus 10 percent of their net income, according to a new tax bill.

Operators of gambling call centers will have to pay up to $82,000 a year in taxes under the same proposed law.

The last levy is the one that bothers those who rent apartments and houses and those who operate restaurants. Throughout the economic downturn call centers here have been profitable and the expat employees are big spenders. They rent luxury homes and apartments. They are steady customers at bars and restaurants.
Casinos do not have the flexibility of call centers, which can move to another country overnight. In addition to the well-paid expat managers, these call centers employ many Costa Ricans.

In contrast, relocation experts say they are having the best months ever with inquires and contacts from persons who wish to live in Costa Rica. Javier Zavaleta of Residency in Costa Rica wondered if the U.S. economy may have prompted more people to consider living aboard. Yet some of his inquires come from Canadians and even Europeans.

The various expat discussion lists have steady exchanges on relocation to Costa Rica.

The international interest is in spite of a less favorable dollar-colon exchange rate and increasing Costa Rican prices. Some long-time expats have announced that they are leaving over these conditions that put them in an economic squeeze.

The so-called second tourism season should be of help to the struggling hotels that have suffered the brunt of the U.S. economic downturn.

Students and vacationing teachers are not luxury hotel candidates but prime customers for the struggling individually owned hotels that have experienced low occupancy rates because the country appears to be over-built with chain hotels and other places offering accommodations.

In anticipation of this second season, some downtown San José restaurants have jacked up their prices as much a 30 percent.

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