Combo fiscal: the controversial reform of Costa Rica

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After a social crisis in which Costa Rica was for 3 months, the tax reform was approved

COP24's conclusions: between uncertainty and hope

Despite having been on strike for several months, the tax reform called "Combo fiscal" was approved in Costa Rica. The controversial law aims to put more taxes on Costa Ricans to correct the deficit in public finances, thus achieving a 2% decrease.

Although the Ministry of Finance affirms that the taxes will be for the whole town, there are already several people who think that both the upper strata and the bankers will be exempt from the payment of taxes.

On the other hand, for the director of the Culture and Development Research Center (CICDE UNED) Luis Paulino Vargas and in dialogue with HispanTv, the reform is not viable. "The same process of fiscal adjustment will cause the economy to deteriorate. Lack of clarity in matters of economic policy, that one-sidedness to the fiscal issue and neglecting other very important issues. All that will take its toll," he concluded.

The president of Costa Rica, Carlos Alvarado Quesada, signed the reform on December 4 and affirmed that "with the approval of the reform the country has avoided an economic crisis, a fiscal crisis". In addition, he affirmed in his social networks that "From now, on a stage of optimism, hope and certainty about the future of Costa Rica opens up."

Leer en español: Combo fiscal: la polémica reforma de Costa Rica

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To recover the fiscal deficit, the reform proposes to add the Value Added Tax (VAT), it will bring reforms to the Income Tax, to the public employment law and the fiscal rule for the Government. All these changes will be gradually implemented.

Faced with this, the economist Daniel Suchar said for the media Teletica, that with the approval of the reform, the panorama of uncertainty and governability becomes clearer. "Now we have a much clearer roadmap for all citizens, we already know what we are going for". In addition, he adds that the reforms are urgent and necessary to improve the finances of Costa Rica.

He also goes on to say that with these reforms, the exchange rate will benefit, since it will be less volatile. On the other hand, it affirms that the foreign investment will be favored since "no longer it will be pending of the ultimatum that the rating agencies of risk had given to the Government".

On the other hand, the Minister of Finance, Rocío Aguilar, remains positive in the face of the reform: "This reform is the first thing that generates trust in the country and that can not be quantified in thousands of dollars, but allows them to be taken again investment decisions ", as reported by Ibero Economía.

The effects of the strike

After more than 50 days on strike, where trade unionists and teachers, among others who came together to avoid reform, the ravages of the strike were noted. According to the International Monetary Fund (IMF), Costa Rica's economy grew by only 2.6%, as a result of the three-month strike by state workers against the fiscal adjustment and the effects derived from the Nicaraguan crisis. "


LatinAmerican Post | Laura Viviana Guevara Muñoz

Translated from "Combo fiscal: la polémica reforma fiscal de Costa Rica"

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