Tax reform bill passes first debate late Wednesday

March 14, 2012

After six months of bickering and failed attempts to pass a tax reform bill, the Legislative Assembly finally jammed the bill through the first debate late Wednesday night.

Shortly, before 8 p.m. lawmakers voted on the bill, with 31 in favor and 19 against it. The votes for the bill all came from two parties – the ruling National Liberation Party (22 votes) and the Citizen Action Party (8 votes) – except for a sole vote from evangelical lawmaker Carlos Avendaño.

Five parties, voted against the bill, including all the members of the Libertarian Movement, the Social Christian Unity Party and Accessibility Without Exclusion Party, the Broad Front Party and two members of the Citizen Action Party, chief legislator Juan Carlos Mendoza and Carmen Muñoz.

Now attention turns to the Constitutional Chamber of the Supreme Court (Sala IV). Two motions of unconstitutionality filed by Social Christian Unity member Luis Fishman, who claimed there were errors during the first debate procedures. It could be a couple of months before the Sala IV rules, and the judgment could restart the voting process.  

“This whole procedure has been rushed, carelessly treated,” said José María Villalta, of the Broad Front Party. “The [National Liberation Party’s] only hope is that the Sala IV says they are right and the bill is fine just like it is.”

Legislative President Mendoza agreed, expressing worry that errors could be found in the way the bill was written and force lawmakers to revisit articles again.

Until the Sala IV rules on those actions, the bill will not face the second, which is the final step necessary before the legislation is sent to the president to be signed into law.

The primary goal of the fiscal reform package is make tax collection 1.5 percent of the gross domestic product (GDP). The most significant change proposed to accomplish this is an increase from a 13 percent sales tax to a 14 percent value-added tax. This would result in additional charges on services like private education, private health services, among other service providers such as lawyers and engineers.

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