Why should resident expats even care about the national budget battle?

Among journalists, budget is spelled ho hum! Whether in a small town in Iowa or the U.S. capital hardly anyone except those involved follow budget making.

That is why there is so much self-dealing among officials.

So the question is, why should expats care about the Costa Rican budget? A lot depends on the expat’s circumstances.

A perpetual tourist with no financial links to the country can always find another beach. But a snowbird with a Pacific condo or an expat resident with property and investments share the fate of the country.

Expats already felt the pinch of the fiscal deficit when the country passed a luxury home tax. Whether owners or renters, many expats live in dwellings that fall into the luxury home category, so they either paid the tax or did so indirectly with rent.

Now expat residents are expressing concern as the finance ministry plans some form of a global tax of all income regardless of the source.

Then there is the proposal for a value-added tax. Officials may deny it, but a value-added tax collects a lot more money than a straight 13 percent sales tax. The food marketer chamber just expressed fears that the government may actually jack up the percentage on any value added tax.

Regardless, the tax is likely to cover more categories that the existing tax, which means expats will pay more. Just ask the tourism industry which has been included administratively in the existing sales tax starting Jan. 1, 2016. And a lot of expats are involved in the tourism business, so there goes their 2016 pay raises.

Some expats may be surprised to earn that the national budget of $14 billion just approved by s legislative committee, averaged out to slightly more than $3,000 for every resident here. That is unsustainable  considering that many Costa Ricans are below the tax-paying threshold and that half the budget is borrowed money anyway.

The Greek government is a good example. Officials there were unable to borrow more money when the 2008 financial crisis hit, and there was talk of a general default. Costa Rican’s international debt has just been categorized as junk status.

Such problems do not make for happy countries, which is why Costa Rica needs to chart a reasonable course out of its mess. And individual expats need to pay attention to avoid being blindsided.

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