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Chinchilla tax plan raises
citizen interests in politics

For Costa Rica Business

The effort by the Laura Chinchilla administration to put through a 14 percent value-added levy and other taxes has had significant impacts.

Many more Costa Ricans are taking an interest in politics. But expats are concerned that they will be the sacrificial lambs as the government rushes to raise more money.

The revelations by La Nación over what it called editorially a clique showed how money is passed around by those in power. Not only did many well-connected politicians duck taxes, but there is a criminal investigation.

Prosecutors are looking into a contract given without much notice to the wife of the former finance minister. The woman, Florisabel Rodríguez Céspedes, was working as a special assistant to President Chinchilla until the news broke that she and her husband failed to update the value of real estate. The issue was more critical because the couple were leasing the property to the state.

Ms. Rodríguez still had time to run a company called Procesos that sought the contract from the Refinadora Costarricense de Petróleo S.A., the state fuel monopoly. She had a lot of support. The petroleum firm received endorsements from Luis Liberman, a vice president, the minster of education, and Ms. Chinchilla's brother, who was her campaign manager.

There was not much competition. A spokesman for the refinery firm said staffers there made a computer error and only invited three other firms to submit bids for the direct contract. And those three firms do not do the public relations work that the contract required. They supply building materials.

A segment of the public always knew that the Chinchilla tax plan would cost them more money despite her claims that only the rich would pay. A minority of the legislators opposed the measure. But the administration stitched together a coalition of the ruling Partido Liberación Nacional and Partido Acción Ciudadana and a few other lawmakers to pass the measure on first reading.

What generated the fury among the members of the public were the La Nación articles that began in late March.

The result is an Internet petition that seeks to have the president fire all the ministers who the newspaper reported failed to update the values of their property and, thereby saved on municipal taxes.

The petition also seeks the removal of any high official who is behind on payments to the Caja Costarricense de Seguro Social.

The internet demands also include fast-track passage of several anticorruption and illegal enrichment measures now in the legislature.

The petition also seeks the suspension of efforts to pass the tax plan again until all the debts are paid to the Caja and to the nation's tax collectors.

Already the petition has more than 2,000 signers.

There also are two other demands that are not directly related to taxes. One request is for passage of a forest protection law and another to stop the creation of a colegio of professionals in the arts, a measure that the petition originators say will hamper liberty of expression. A colegio is a legally binding organization of professionals that demands certain types of education or competency. An example is the Colegio de Abogados to which all practicing lawyers must belong.

Expats here have been concerned about the tax bill, including a measure that would tax upscale rentals. But now they also fear that the Chinchilla administration will try to tax money coming into the country. That idea has been considered in the past, and the then-finance minister, Fernando Herrero, had to explain that the tax bill would only put a levy on the commissions charged by banks. But there have been proposals in the past to tax money, such as pensions and cash for home purchases at the bank level. The tax plan put a 10 percent levy on money going the other way. The tax was on money remitted to a foreign parent company by a firm doing business here.

The Sala IV constitutional court rejected the tax plan in a decision announced Tuesday. But the court only had trouble with the way lawmakers passed the measure. Magistrates reserved comment on the contents of the legislation. Now the bill is back in committee, and may come out unchanged but with the required procedural changes the court demanded.

— April 12, 2012