With just a year left in office for President Laura Chinchilla, expat business people are searching for someone, anyone, who can stimulate the economy and start using a little promotion to market the country to the world.
With hundreds of thousands of U.S. expats looking for a retirement home, Costa Rican officials have done exactly the opposite than what is needed to attract them here. That assess taxes and more taxes without regard for the result. And they frequently change the rules.
Consequently, there is a glut of apartments, condos and houses. The real estate market is slow. The rental market is slow. The prospects are uncertain.
Some expats look to San José Mayor Johnny Araya to bring business awareness to Casa Presidencial. Others say he is a man who bends the rules and that he is more interested in ensuring his own future.
Regardless of what happens in next February’s elections, a few expat business leaders want to make a statement for change and improvement of the condition of their fellow foreign residents. Here are some ideas:
In order to maintain residency, expats have to affiliate with the Caja Costarricense de Seguro Social. They must pay a monthly fee regardless of any other types of medical insurance they now hold. Some expats can meet this requirement with $30 or $50 a month, but financially sound expats, the kind of new residents that will help the economy, are tagged for hundreds of dollars. The amount is based on monthly income. A rentista has to show at least $2,500 a month in income.
The hope is that the rules will be changed so that expats have a choice between a policy provided by the Instituto Nacional de Seguros, the Caja or perhaps one of the new private insurers. And maybe if the United States extends Medicare benefits overseas, that will be counted. too.
At the very least, Caja payments should be levied only when an expat is actually in the country.
The driver’s license
For unexplained reasons, the traffic agency ruledthat a national driving license could only be given to foreigners holding official residency. Since it might take two years for a residency application to be processed, expats who follow the law are in limbo. Meanwhile, in the United States, local governments are changing the rules so illegal immigrants, including some Costa Ricans, can obtain a driver’s license. Certainly the Consejo de Seguro Vial should accept a statement of intent or a paper that says residency has been sought as a requirement for a local license.
Of course a driver’s license is useless without a vehicle. As the Association of Residents of Costa Rica has reported, the county eliminated its special vehicle exoneration for pensionados in 1992. This was the program that allowed a foreign resident to bring in a vehicle once every five years without paying the confiscatory taxes that are levied on cars.
There still are a few of those PEN plates circulating in the Central Valley. Costa Rica was in the business of attracting foreign residents then.
Panamá, now being touted as a great place for foreign retirees, has such a program and even mandates retail sales discounts for foreign residents.
The household goods
Another surprise for foreigners moving here is that the government slaps duty on household goods that a potential expat might be bringing from a former home. Many do not realize this until their shipping container hits Costa Rica, although reputable shippers alert their customers.
Foreigners should be able to duck customs duty on personal items that are not being brought here for sale.
One expat in business here points out that foreign residents should have some financial security. He suggests a rule that protects bank accounts from attachment or confiscation and a homestead exemption that does the same for a home. He notes that some accounts in Banco Popular already have this protection. Foreigners are particularly vulnerable because many bring large amounts of money here to comply with residency requirements.
The luxury home tax
Costa Rica’s special tax on properties valued at more than 106 million colons is unfair. Although this is not directed at expats, many Costa Ricans just do not pay their fair share. And it is challenging to comply with the rules.
The special corporate tax
A 2-year-old annual tax on corporations has hit expats hard because many keep their car and home in corporations to protect their assets. Certainly there should be some cut off so that inactive corporations at least used for this purpose are not subject to the tax.
The legal system
President Chinchilla showed Monday that contracts are just pieces of paper when she cancelled the San Ramón highway concession. Expats face this problem to a lesser extent when they become involved in home purchases and other routine business situations. Costa Ricans, too, would benefit from a more efficient legal system that can act to help victims of financial crimes.
That brings up the case of crooked lawyers, and there are many. The Colegio de Abogados seems to only take action when a lawyer does not pay his or her dues. This legally constituted oversight organization should give special consideration to foreigners, including those who do not speak Spanish. And the organization should expel the crooks.
Weapons are not for everyone, but the U.S. Supreme Court has ruled that having a weapon for self defense is a natural right. Wrong headed thinking in the Chinchilla administration claims that the fewer the guns the fewer the crimes. That leaves expats at the mercy of crooks. Now only those with permanent residency can even apply for a firearms permit. That right should again be extended to pensionados and rentistas.
Who should take action?
Organizations like the Association of Residents go a long way in helping new arrivals learn and understand the culture. A.M. Costa Rica does also. Ultimately, the action has to come from the expats already here and those who may come.
So the opportunity is here for anyone to make suggestions to improve the plight of foreign residents here. Send your ideas to firstname.lastname@example.org. We will consolidate them and print the responses. And then we will bring them to the attention of political candidates.
And then maybe some in Costa Rican officialdom will wake up and realize that the country is missing out on the financial and cultural benefits of an entire generation of well-heeled retirees.