The nation’s budget watchdog came out with a report Monday that supports the theory that what you tax you get less of.
The agency, the Contraloría General de la República, studied sales tax collection, which is a major source of government income. The income involves general sales tax and also tax imposed by the Aduana or customs agency on imported goods.
The report showed a decline in general sales tax from 2008 to 2014. In 2009 sales tax represented 39 percent of the income the country received. That was 6 percent of the gross domestic product. In 2014 the percentage still was 36 percent but the percentage of the domestic product declined to 4.7 percent, said the report. No financial figures were given in a summary so the actual amounts collected were not known. Meanwhile, services, which are not taxed now, grew from 41.8 percent to 50.8 percent of gross domestic product while commerce and manufacturing, which is taxed, declined from 38.4 percent to 30.4 percent, the report said.
The Contraloría concluded that the government should revise the structure of the taxes with regard to the activities that are not now covered and transactions that are exonerated. The goal would be to bring in more money. The report also suggested adjusting the annual sales tax.
The central government, which is about to announce plans for a value-added tax should be happy with the report. A value added tax is supposed to control evasion and also cover many more transactions.