President Luis Guillermo Solís said Sunday night that the 2016 budget would only be a half of a percent higher than this year’s.
The president made the statement on his Sunday night television segment, the cadena national, which some major stations did not run. Instead, there was soccer and a movie.
Solís used the budget message as a vehicle to promote passage of his proposed value-added tax and the increases in income taxes for higher-earners.
The president did not give numbers to explain what the budget would look like if these taxes were not approved. The tax proposals face heavy opposition in the legislature.
Solís noted that his tax plan included returning sales tax expenses to the poorest 40 percent of the country. But that expenditure is not in the budget, even if the value-added tax is passed. The proposed law gives the government two years to return the money.
The Costa Rican national budget for this year is $7.7 trillion colons or about $14.5 billion.
Solís said that the government has to maintain a minimal investment to avoid affecting the services that the citizens required. He praised the budget as the one with the smallest increase in 10 years.
He said the goal was to prepare a budget that did not cause cuts in education, health, security or in fighting poverty. The government budget has been financed for years with borrowing, and recent budgets contain nearly 50 percent of borrowed funds. Consequently debt service is a big budget item.
He said the new budget reduces expenses for advertising by 36 percent, overseas transportation by 17 percent, overseas per diems by 30 percent and consultants by 7.5 percent.
He said that the proposed budget includes cuts of 384.7 billon colons or about $745 million at the current exchange rate. However, he did not say if these were actual cuts or reductions in the wish lists presented by the various ministries. He did say that 99.7 percent of the cuts were within the budget for the executive branch. Budgets for the legislatures, the judiciary and the election tribunal were basically untouched.
The president’s message did not include any mention of selling off government property to apply to the national deficit.
Last year Solís presented a budget that was 12 percent higher than the previous year, and that generated extensive discussions in the legislature. Finally, the executive branch was forced to make substantial cuts.