Slow reduction of expenses proposed

The finance ministry proposed a bill Tuesday that it said is designed to reduce the growth of government expenses.

The bill is called the law of fiscal responsibility, and the ministry said that it is part of a larger package of bills that include new taxes. To be effective the legislature must approve eight bills already presented by the executive branch, said the ministry.

At the same time the Partido Acción Ciudadana, which is allied with President Luis Guillermo Solís,  said it would begin discussions with other political parties. The goal would be to define a route for the passage of financial bills.

The executive branch’s efforts to propose budget cuts is having an immediate effect, too. Government employees are worried, and certain proposals about pensions and the latest bill about public finances add to concerns that already have generated a two-day general strike of medical workers and teachers.

The Bloque Sindical y Social, which already has called for an indefinite general strike, has planned a press conference today to discuss negotiations that have been taking place with the Ministro de Trabajo. The Bloque said that it would reply to comments by the president on the topic of public finance.

What is said at the 10 a.m. gathering will indicate if the country will face another crippling general strike.

Antonio Álvarez Desanti, the president of the Asamblea Legislativa, said Tuesday that the salaries that public employees make today would not be touched by any legislation. He said that laws cannot be retroactive. He called for discussions with union representatives and said the time was premature to talk about strikes.

The proposal by the Ministerio de Hacienda, No. 19,952, takes note of a constitutional provision that says the legislature cannot increase expenses without saying from where the additional money will come.

This is a provision widely disregarded.

A summary calls for slowly stabilizing the public debt with gradual implementation of reductions to avoid abrupt cutbacks. The summary also said that the entire process would require financial discipline.

Pensions, old age payments and disability benefits would not be touched nor would public companies facing private competition, it said. That is assumed to mean the Instituto Costarricense de Electricidad.

The executive branch is seeking, among other proposals, a renewal of a levy on corporations, a value added tax and an increase in the income tax rates.

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