The nation’s food marketing chamber has issued the first organized challenge to the central government’s plan for a 15 percent value-added tax.
The chamber, the Cámara Costarricense de la Industria Alimentaria, said that such a tax would be regressive and direct a blow at the pockets of consumers at the time they acquire the goods and services that they need.
The government has been open in planning to replace the current 13 percent sales tax with a more inclusive value-added tax. But a visiting technician from the International Monetary Fund suggested a higher rate in a visit this week.
The government is desperately trying to raise more money to stem the flow of red ink.
Half the annual budget is borrowed money, and the current administration actually submitted a 2015 budget that was higher than the one for the previous year.
The food marketing chamber, under the name of its president, José Manuel Hernando, said the government should do other things. It suggested revising the pension system, studying the salary incentives and eliminated duplicate work by separate ministries. The chamber also said that the public lacks an accounting of the enormous expenses in health and education.
All of these areas have been topics of media revelations since President Luis Guillermo Solís took office.
The value-added tax applies the levy at every stage of production, and the end consumer pays it all. The tax generally raises more than a sales tax, in part because the accounting system discourages evasion. Plus, the government probably will tax many items that are not now subject to the sales tax.
Within the food industry a 15 percent tax will bankrupt companies, encourage the informal economy and drastically hit the pockets of consumers who will be the most affected, said the chamber.