President Alvarado in search of endorsements to approve tax reform
Costa Rica
11 mayo 2018

After taking office on Tuesday May 8th, President of the Republic Carlos Alvarado (Partido Acción Ciudadana – PAC) met with members of the two main opposition parties in the National Assembly. The objective is to have the necessary support to approve the tax reform bill that is under discussion in the National Assembly. Together, both groups have 31 of the 57 seats.

Both fractions of the Costa Rican Congress expressed their desire to collaborate, although they requested in return that the government control public spending. The new Minister of the Presidency, Rodolfo Piza, said that they will let them participate in the drafting of the law and stated that Finance Minister, Rocio Aguilar will present a plan to contain State spendings in the coming weeks. This decision would comply with the request of the Partido de Liberación Nacional (opposition) led by Carlos Ricardo Benavides, to accelerate the debate of the tax reform bill.

The Executive branch’s initiative proposes to convert the sales tax into a value added tax, without modifying the 13% rate currently applicable for the sales tax but expanding the taxpayer base. It would also modify the income tax for higher salaries and limit budget spending. For the ruling party it is important to pass this law and correct the financial problem that their predecessor, Luis Guillermo Solís, acknowledged too late and could not resolve.

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