New year will see competing versions of finances

As the new year opens, the financial stability of the country hangs in the balance.

From the executive branch perspective, only new taxes can reduce the fiscal crisis. President Luis Guillermo Solís has been clear that a 15 percent value-added tax is needed to replace the existing 13 percent sales tax. He also seeks a series of other laws, including an update to the income taxes and provisions against customs fraud.

From some in the legislature, what is needed is a demonstration that the executive branch is ready to reduce spending. That has not happened, and the current budget is higher than the previous.

In fact, every day there seems to be a new project being put forward by the executive branch. One of the latest is promoted on the presidential Web site.

This is a proposal to reduce the gap between Internet users and those who are not with a $300 million price tag.

The proposal is, in the words of the government, to democratize Internet access and service over the next three years.

This is a project that was launched in October by the  Ministerio de Ciencia, Tecnología y Telecomunicaciones. Residents of some 140,000 homes will be subsidized to connect to the Internet, according to the proposal.

A key test for the president’s plan will be the corporate tax that the Presidencia wants to see reinstated.  This is the tax on corporations that was ruled unconstitutional for technical reasons. Casa Presidencial hoped that the measure would be passed by the legislature by the new year.

To improve chances of passage, Casa Presidencial presented a new draft that assesses a higher tax on high grossing firms.

This measure certainly will be on the agenda when lawmakers reconvene.

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