Shortage of Wood Expected in 2010

January 21, 2005

BY the year 2010, less than 30% ofthe wood used in Costa Rica will be producedin the country, according to estimatesfrom the National Forest FinancingFund (FONAFIFO). The organization predictsthat a drastic reduction in nationalwood production might result from theelimination of Article 30 of the ForestryLaw, which says companies’ profits fromany investments in reforestation are taxdeductible.The Law of Simplification and TaxEfficiency eliminated this benefit, whichled investors to begin relocating in othercountries, mainly Nicaragua and Panama,according to a statement from FONAFIFO.Another problem involves the forestrytax established by Law 7575, because ofdisagreement about how to charge it.According to the statement, discrepancyin the article’s wording has preventedthe collection of approximately ¢2.5 billion($6 million) in the past six years,while the National Forest DevelopmentPlan requires twice this amount to stayafloat during the next 10 years.FONAFIFO says the impact of thewood deficit is expected to generate anincrease in illegal felling and woodimports exceeding $500 million, and areduction of reforestation as a social andeconomic activity by 2010.To encourage investments in forestryand development of this sector, the ForestFinancing Fund, the Ministry of theEnvironment and Energy (MINAE) andthe National System of Areas of Conservation(SINAC) have proposed two lawprojects before the Legislative Assembly.One would reestablish Article 30 ofthe Forestry Law, and the other wouldensure payment of the Forestry Tax,according to FONAFIFO.

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