San José, Costa Rica, since 1956

Arias Pitches Taxes, Trade to Business Audience

(Fourth in a series on presidential candidates’ positions on the economy, business and trade.)“EVERY road I see in ruins, every school I visit where there are no desks… every child I see selling cell phone covers at a stop light, every marginalized community that asks me for nothing more than education to overcome the infernal cycle of misery… convinces me that we, the most privileged of this society, have an urgent responsibility,” presidential candidate Oscar Arias told a room packed full of business people at a recent meeting of the Costa Rican-American Chamber of Commerce (AmCham).Arias’ call for more taxes among the wealthy was a bold one, considering his audience – particularly since business leaders are among his greatest supporters. The candidate, who was President from 1986-1990, also called for a “strong state” and, as expected, support for concessions as a way to build public works projects; increased foreign investment; and legislative ratification of the Central American Free-Trade Agreement with the United States (CAFTA).Arias, 65, aims to make Costa Rica the first developed country in Latin America by 2021. He also aims to reduce poverty levels – currently at 21.2% (see separate story) – by at least 1% each year of his administration.THE candidate called for a social policy based on transforming the tax system; progressive and transparent allocation of public funds; thorough evaluation of the results of government spending; strengthening of public services, particularly education; and prioritizing resources according to poverty.High economic growth is fundamental in the fight against poverty and inequality, Arias said, setting a goal of 6% annual growth. However, he added that economic growth alone has been incapable of eliminating poverty. Resolving the country’s fiscal crisis is necessary in order to make social reforms, said Arias, who won the Nobel Peace Prize in 1987 for his leadership role in the Central American peace process.Tax reform will allow road construction, increased security, investment in science and technology research (at a rate of 1% of the annual gross domestic product), and improved education, investment in which will be increased to 8% of the GDP, Arias said.THIS fiscal reform must go beyond reducing tax evasion, he added.“Combating fiscal evasion requires institutional and cultural transformation whose benefits, in the best of cases, will be seen slowly and gradually. Without a doubt, these changes are necessary,” he said. Costa Rica’s tax burden is half the average of the world’s most developed countries, which are part of the Organization for Economic Cooperation and Development (OECD).“Spain, one of the greatest development miracles of this generation, doubled its tax burden from less than 18% to more than 35% of its GDP in the last 30 years, while its levels of economic wealth, quality of life, and capacity to attract foreign investment have done nothing but increase,” Arias said.During the AmCham meeting, held Oct. 26, Arias also pushed for more free trade.“To modernize the productive sector and increase the well-being of the population, a country the size of Costa Rica has only one path: deepening its economic integration with the world,” he said. Costa Rica has the opportunity to do this with CAFTA, which allows for not only greater access to the world’s largest market, but also the increased foreign investment and technology transfer necessary for the country’s development, he continued.“This free-trade agreement, like any other, doesn’t offer certainties, but rather opportunities,” he said.PUBLIC investment is needed in infrastructure like schools, Arias argued, but private investment should complement this. The candidate supports concessions – private investment in public infrastructure projects – for highways, ports and airports. “I have told people in Guanacaste if they are waiting for the government to expand the Liberia airport, they should buy a hammock because in the next 20 years it’s not going to happen,” he said.Concessions are the key to development, Arias said, adding that he supports the selection in June of Rocío Aguilar, former head of the National Concessions Council, as the Comptroller General because she is an expert in concessions. (The comptroller must approve all concessions).THE candidate also pitched increasing national investment; lowering interest rates; preserving macroeconomic equilibrium; strengthening small and medium businesses and their ties in the production chain to larger companies; and reactivating the development bank.He also said a regulatory framework is needed for a “gradual, selective and ordered” opening of the government monopolies on telecommunications and insurance.“We can’t procrastinate any more. If we don’t decide our future, life will do it for us,” he said.Arias promised to return leadership to the presidency, which he says is now lacking.“Governing is not postponing decisions; searching for consensus is a negation of leadership. We are going to do what we think is fair… we are going to make decisions,” he said.AMCHAM will host Union for Change candidate Antonio Alvarez Desanti today. Social Christian Unity Party (PUSC) candidate Ricardo Toledo, Libertarian candidate Otto Guevara and Citizen Action Party (PAC) candidate Ottón Solís have already addressed the group (TT, Sept. 9, Oct. 14, Oct. 21). For more information, call 220-2200.

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