San José, Costa Rica, since 1956

Alvarez Desanti: A Call for Stability, Efficiency

(Fifth in a series on presidential candidates’ positions on the economy, business and trade.)HIGHWAYS without bridges, bridges without highways, bills in the Legislative Assembly for four years and trials in the court system for eleven – these are just a few of the examples of the lack of governability that has brought the country to a standstill, Union for Change candidate Antonio Alvarez Desanti said at a recent meeting of the Costa Rican-American Chamber of Commerce (AmCham) at the Hotel Palma Real.Rivaling this as the country’s greatest problem is poverty, the 47-year-old candidate continued. Solving both problems requires economic growth and a better distribution of wealth, he said.“How do we achieve this economic growth?” Alvarez asked. “If there is one thing a government should have, it is stable policies – within investment plans, within development programs, within the invitation to businesses to come to the country.The next administration has to have clear, stable policies to guarantee to investors that they are coming to a country with rules that aren’t going to change.”The Permanent Fiscal Reform Package to overhaul the country’s tax system, a change that has bounced around in the Legislative Assembly for three years, is the perfect example of this lack of clarity.Potential investors haven’t known the “rules of the game” on how they will be taxed in order to decide if they want to participate in Costa Rica’s economy.Thus, economic growth has been strangled, Alvarez said.WHILE Alvarez supports setting the tax rules straight, he does not support everything in the proposed tax plan. But more important than changing the tax regimen is getting people and companies to pay taxes, he said.“The government should be more drastic in charging taxes, closing businesses that fail to pay the sales tax, shutting down stadiums and soccer teams that don’t pay the Social Security System (Caja),” he said.“If we don’t attack these problems, it won’t matter what fiscal plan we push… because we still won’t achieve the benefits a fiscal reform will generate.”Alvarez said that if elected President, he would support the Finance Ministry with the necessary policies to improve tax collection. He also said he would consider transforming the current sales tax, which applies only to sales of goods, to a value added tax on goods and services.COSTA Rica is also ready for a big change in its monetary policy, away from the crawling-peg daily devaluation system that has defined the colon for the past 24 years, and which, according to Alvarez, has been a trigger for inflation. The candidate favors a managed float of the colon, allowing the market to decide its value against the dollar based on supply and demand, while allowing the Central Bank to intervene if the price of the colon against the dollar gets too high or low.Under this system, the Central Bank would be allowed to manipulate the colon’s value by buying and selling colons in the form of bonds, Alvarez added – speaking quickly, eager to get his proposals out in the hour he was allotted to speak.The autonomy of the Central Bank should be strengthened “so that it is not bound by the swings of politics, but instead by technical criteria, so that the monetary policy succeeds in maintaining an equilibrium in inflationary control… allowing solid growth,” he said.LIKE four of the other top five presidential candidates, Alvarez supports the Central American Free-Trade Agreement with the United States (CAFTA) and urges its ratification in the Legislative Assembly. “We are very worried about the loss of competitiveness if it is not ratified. I don’t want to see a housewife or a consumer in the United States buy a melon from Guatemala rather than Costa Rica because Costa Rica pays 39% taxes and Guatemala does not,” he said.Furthermore, CAFTA’s ratification is necessary before continuing with other free-trade agreements around the globe, Alvarez continued.“We cannot become an island. The world is changing; technology is changing how business works. We can’t stop globalization by putting a stoplight in the airport and another at (the border crossings of) Peñas Blancas and Paso Canoas,” he said.While Costa Rica can compete internationally without fear, Alvarez said that he supports negotiating certain changes to CAFTA once it is in effect.IN order to improve the investment climate, the candidate proposes improving public infrastructure by granting concessions to private companies to build roads, ports and airports; increasing flexibility in labor schedules; and improving training for the country’s labor pool.He also aims to overhaul the country’s permit process. Hundreds of government procedures are often necessary in order to develop a property or start a business, Alvarez pointed out, promising that his administration would reduce this to 10-15 procedures.“Many times in this country we produce in spite of the government,” he said. Alvarez also has a ten-point plan he says will guarantee state efficiency and increase governabilty.For the legislature, he proposes guaranteeing that the final vote on a bill will happen in 180 days; creating two agendas, one for highly politicized bills and one for non-controversial bills; and improving communication with the Comptroller General’s Office.In terms of administration, he proposes accelerating efforts for online government services; allowing autonomous government institutions more freedom in their finances; improving authority and leadership in public- sector institutions; and allowing contracts for infrastructure projects to be given using the law of emergencies, considering many have been delayed for several years.For the judicial system, Alvarez proposes taking steps to accelerate the justice process and increase penalties for crimes.“With this plan, in the first three months of my administration, we can break through the bottlenecks that make this country ungovernable,” he said.DESANTI’S address was the last in a series of AmCham visits by major presidential candidates. Liberation Party candidate (PLN) Oscar Arias, 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, Nov. 11).

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