Central government readies another package of fiscal reforms

The Laura Chinchilla administration is making an effort to create new taxes and increase government income before the president leaves office in May next year.

Édgar Ayales Esna, the minister of Hacienda, promises an open and consultive effort in three steps.

The effort will be designed to include input for presidential candidates. The election is in February 2014.

The project is seen by some as a way to institute a value-added tax and other taxes that failed to pass the legislature earlier in the president’s term.

The feisty Asociación Nacional de Empleados Públicos y Privados already has checked in with an opinion.  The government should do something about the more than 1,000 public employees who make more than 5 million colons a month, the union said. The amount is more than $10,000 or more than $120,000 a year. The union said Ayales was on another crusade.

In fact, the central government is proposing changes to public employee salaries, but the issue is controversial.

The government already has floated $1 billion in bonds at a 4.5 percent interest rate to reduce some of its expenditures. And, as Ayales notes, the central government has instituted a job freeze,

Still nearly half of the annual national budget is being financed by debt.

Ayales said that by June the first stage of designing a proposal will be completed and that it will be published for comments. Then the government will enter into more discussions on specifics with various sectors of the economy. The third stage will be to send proposed legislation to lawmakers with the hope that they can pass the measures by May 2014.

From a political perspective such a move will absolve an incoming president of responsibility for the proposals, which certainly will include more taxes.

Ayales said the goal would be to give the country a balanced and comprehensive solution to its financial problems.

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