Representatives of the World Bank and the Interamerican Development Bank met with Costa Rican officials and some legislators Monday to push for approval of more taxes.
There are a handful of bills at the legislature that the executive branch has proposed. Still even within the Presidencia there are those who doubt any bill will be approved unless strong curbs are placed on spending. President Luis Guillermo Solís has not shown an inclination to make significant budget cuts.
In fact, the central government is going ahead with major construction projects that eventually will show up in future budgets.
Lawmakers already approved for the second and final time in September a $48 million loan to build a wholesale produce market in Sardinal, Guanacaste.
State banks are putting up $12 million and the government the balance for a $35 million convention center in Heredia. The Instituto Costarricense de Turismo also seeks to hire some one to help it market the facility.
The Ministerio de Obras Públicas y Transportes will soon seek bids for a $7.5 million office tower at Plaza Víquez. This is supposed to be the start of a $30 million government city.
The finance ministry still is trying to purchase a 5,200-square meter office building for $121.7 million.
Even the legislature plans new buildings at a cost of $76 million.
The public has taken notice, and there even is a Facebook page devoted to fighting the legislative construction proposals.
The visitors Monday were Fabrizio Zarcone of the World Bank and Javier Biverinotti of the Interamerican Development Bank. Both entities have significant investments in Costa Rican loans.
The Partido Acción Ciudadana, which generally supports new taxes, reported the meeting. This is the party of the president, and attending Helio Fallas Venegas, minister of Hacienda, and José Francisco Pacheco Jiménez and Fernando Rodríguez Garr, both vice ministers.
Marco Vinicio Redondo Quirós, an Acción Ciudadana lawmaker, said the two men visited to verify what the government has been saying. Redondo said some persons object because the proposals have been put forward by the current government.
Fallas is seeking a value-added tax, increased income tax, anti-fraud legislation as well as changes in what income is exonerated from taxes. There also are bills to reduce the amount spent in pensions. And then there is the bill to renew the tax on corporations.
The U.S. Federal Reserve Board is expected to begin this week increasing the interest
rate it charges to banks, and this is expected
to have an impact on what Costa Rica will have to pay for international loans.
There also is the possibility that the Banco Central will not be able to continue to support the colon currency against the dollar. An increase in the value of the dollar will make repayments of international debt harder. The colon is among the few currencies that has actually increased in value against the ever stronger dollar.
Although officials seldom discuss the topic, average Costa Ricans loath taxes because they do not have faith in public officials. A procession of recent news stories about excessive salaries and pensions contributes to this attitude. They also suspect systemic corruption.
The Ministerio de Hacienda unknowingly supported this anti-tax view Monday when it reported that it had collected 926.7 million colons ($1.76 million) from professionals who had understated their income.
The Dirección General de Tributación, the tax agency, is part of the ministry.
The tax agents have been checking up on the returns of 450 professionals who purchased fancy cars, properties and condos, yet declared little income.
The faulty tax reports came from physicians, lawyers and architects, among others, who reported expenses related to food, transportation, private education, medical expenses and personal loans that should not be included, the agency said.
The tax agency said at least 1,000 more professionals will undergo a review after the first of the year.
Meanwhile, the legislature is expected to begin a Christmas holiday without taking action on any of the tax bills.