Edgar Ayales Esna, the finance minister, is supposed to lay out proposals for new taxes this week, but there is opposition already.
The Asociación Nacional de Empleados Públicos y Privados has issued a statement under the heading “We don’t want, we can’t and we ought not pay more taxes!” The association of mostly public employee unions has its own opinions, and that includes attacking what is being called the inequality of incomes and possessions.
In anticipation of what Ayales will say, the powerful, left-wing organization came out strongly against a value-added tax. This is a system of taxing goods at every stage of production, including retail sales. The major benefits are that evasion is reduced and the state income is more. Costa Rica now has a straight sales tax.
President Laura Chinchilla tried to enact a value-added tax, but it was part of a fiscal package that never made it out of the legislature.
The Asociación Nacional de Empleados Públicos y Privados also wants a one-time tax on all the wealth held by individuals. And it agrees with President Chinchilla in seeking a tax on money earned elsewhere in the world by Costa Rican taxpayers. This is the so-called renta mundial that also was favored by the administration.
The unions, however, want the tax assessed when the money is earned and not when the money is brought into Costa Rica, as the administration has proposed in the past.
The unions have a 12-point proposal, and some of them do not seem anti-rich. For example, the statement proposes setting up rewards for those who turn in tax evaders. And the statement also calls for eliminating the many exemptions and exonerations that are now contained in the Costa Rican tax laws.
The proposals also seem to be parallel with the administration’s previous efforts in suggesting a special tax on luxuries and a tax on financial transactions. Unlike the administration, the unions want the financial transaction tax to be only for large amounts so that the working class is not affected. The statement calls this the Robin Hood tax.
A previous finance minister claimed that the central government was only seeking to tax the small amount banks charge to handle automatic teller transactions rather than the amount withdrawn by the customer. But other proposals would tax the whole amount and any money coming in or leaving the country or being exchanged as payments or rents.
Ayales is head of the Ministerio de Hacienda, which handles the governments finance. Part of the ministry is the Dirección General de Tributación, the tax collecting arm.
When the minister makes his proposals, they will be in the form of proposed legislation, although President Chinchilla could step in and issue some sort of decree that may be binding. After the last tax package was stalled in the legislature, the ministry concentrated on finding tax evaders, and President Chinchilla issued a decree applying the sales tax to food while exempting products the poor might purchase.
Whatever are the proposals the minister advances, expats can be sure that those with money will be targeted and that there will be protests by those affected. The entire issue will be injected into the presidential campaign that ends with a Feb. 2 Vote.
Ayales called his presentation “Towards fiscal consolidation: Agenda for a national dialogue,” but the rules for discussion have not yet been established.