The legislature is about to increase the sin tax.
This is not the tax on alcohol or cigarettes, which is the usual description of sin tax elsewhere. This is the country’s tax on adultery and other illicit sexual behavior.
The government has been taxing secret sexual liaisons at 30 percent when such activity takes place in what are called motels here. They are not the family establishments like Motel 6 in the United States, where the commercial promises they’ll leave the light on for you.
As the government so aptly puts it, there are locations for intimate appointments. And the last thing anyone wants is too much light.
The government has been collecting 30 percent every time one of the motel rooms is used. That can be significant because sometimes the rooms are used four to six times a day. In the last five full years, the total tax has been 339,049,950.51 colons, according to the legislature. That’s roughly $665,000.
The money goes to the Instituto Mixto de Ayuda Social, the major social welfare agency. However, officials at the institute and lawmakers fear that there is a lot of evasion. They correctly note in a summary of the bill that not a lot of people who avail themselves of the services of a motel are interested in getting an official receipt or paying by credit card. So there is a lot of opportunities for operators of these establishments to forget to report some income.
The proposed bill, No. 18.718, would assess a tax each month based on the number of rooms, whether or not the rooms have been in use.
The measure not only covers motels, but also hotels that are not listed as a tourist operation with the Instituto Costarricense de Turismo, massage parlors, pensions and strip clubs that maintain, as the summary says, rooms of habitation.
Operations with more than 101 rooms will pay 12 percent of a base salary for each room each month. From 50 to 100 rooms the tax would be 11 percent. From 21 to 50, the tax would be 10 percent. Motels and similar operations with 20 or fewer rooms would pay 9 percent per room per month. The base salary is the universal way of determining taxes and many court and traffic fines. It is about 380,000 colons, but is due for an increase Jan. 1. It is the salary paid to an oficinista 1 in the Poder Judicial.
So an operation with 101 rooms would pay a monthly tax of 4,608,428 colons or about $9,217 a month. Legislative aides estimate that there are 15 establishment in this category. The extra tax would not be applied to bar and beverage services that most of these establishments provide.
The Instituto Mixto de Ayuda Social would be in charge of counting the rooms and making sure the tax is paid. There are 13 of these types of operations that are in court now because they have not paid the tax, lawmakers said. The legislative aide estimated that there are 176 establishments that would be subject to the new tax, although they said they suspect that some operators will try to gain tourism institute certification to avoid the levy.
With the new legislation, which received approval Tuesday by the Comisión Permanente Especial de Ciencia y Tecnología, motels and similar would pay two to three times the current tax.
Naturally the new tax will result in higher charges for customers. Although motels usually cater to couples who arrive together, many of the other operations are really centers of prostitution where the women involved are more or less employees.
Although pimping and operating a center of prostitution is supposed to be illegal, government officials generally look the other way because they are generators of tax and tourist attractions.