Tax Plan Bargains Start; TSE Fights Abstention

June 16, 2006

The administration of President Oscar Arias hasn’t even presented its tax-reform proposals yet, but that isn’t keeping legislators from placing conditions on their support for the plans – and with only 25 seats held by the National Liberation Party (PLN), which brought Arias to power, the Executive Branch might have to do some bargaining for the 29 votes needed for approval. According to the daily La Nación, the conditions include debt forgiveness among public institutions, from the Libertarian Movement Party; austerity measures to cut government spending, from the Citizen Action Party (PAC); and a reduction in tax evasion before passing new taxes, from the Access Without Exclusion Party (PASE).

One of the three tax proposals took shape last week when Finance Minister Guillermo Zuñiga announced the administration has opted for a 13% value-added tax to replace the current sales tax, also 13%. The previous administration’s Permanent Fiscal Reform Package, which was never approved, also included a value-added tax, but Zúñiga told La Nación the new version includes fewer exceptions. This week, the Arias administration announced in a statement from Casa Presidencial that the new tax proposals will be sent to the assembly within one month.

Casa Presidencial took action this week to keep the President riding in style. Arias, who is in Europe promoting trade and recovering from Costa Rica’s World Cup opening loss last week (see separate story), has some shiny new wheels awaiting him upon his return. The brakes, upholstery and battery of the President’s official car, a 1998 Lexus, were worn out, so the car has been replaced by a KIA Opirus donated to the Foreign Relations Ministry last year by the government of Taiwan, according to the daily Al Día. The ¢17 million ($33,000) car features adjustable leather seats, eight airbags and a 6-CD player.

Hoping to fight voter apathy in December’s municipal elections, the Supreme Elections Tribunal (TSE) is planning a ¢40 million ($78 million) get-out-the-vote campaign. The tribunal will pay for TV, radio and print ads encouraging people to vote Dec. 3 and avoid the 77% abstention rate from the first mayoral election in 2002.

The assembly’s International Affairs Committee may conclude its debate of the controversial Central American Free-Trade Agreement with the United States (CAFTA) as soon as September. Appearances by 38 organizations such as the Agroindustrial Sugarcane League and the Costa Rican Federation for Environmental Conservation (FECON) are scheduled to take place until August, and pro-CAFTA committee president Janina del Vecchio told The Tico Times she hopes the group will send the trade pact to the assembly floor the following month, though she emphasized that’s “a little tentative. It could be October or November, we’ll see.” The group is meeting three times per week.

Closer to a vote is a bill to reform the Public Works Concessions Law, La Nación reported. Among other changes, the bill would streamline the concessions process by putting the National Concessions Council in charge of the entire system, even processes such as land expropriation, now in the hands of the Public Works and Transport Ministry (MOPT). The bill is being revised, and appears to have the support of six of the assembly’s eight parties.

 

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