Finance Ministry submits tax reform bills to Legislative Assembly

By L. Arias

The Costa Rican government moved this week to reform the country’s tax laws in an effort to attack the growing fiscal deficit, which has begun to raise alarm both here and abroad.

On Wednesday Costa Rica’s Vice President and Finance Minister Helio Fallas submitted to the Legislative Assembly two draft bills to amend the country’s sales tax and income tax laws.

Those bills look to increase revenue by $1.1 billion — representing just over 2 percent of the country’s gross domestic product — and to reduce the government’s fiscal deficit, which is estimated to reach 6 percent of national production, according to ministry figures.

“Both plans, as well as others currently under discussion at the Legislative Assembly, aim for more efficient public spending, better use of public resources and improved controls over tax evasion,” Fallas said.

The Solís administration’s proposal was first unveiled in March. The Finance Ministry collected public comments and suggestions on the proposals before submitting the reform bills this week.

Value added tax

The first proposal seeks to swap the current sales tax for a value added tax, meaning most products and services would be taxed. However, under the proposal, funds collected from the VAT on certain basic services and goods, like food, would be returned to lower-income taxpayers using … continue reading

Via:: Tico Times