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  • President Carlos Alvarado expects parliamentary approval of his fiscal reform.

    President Carlos Alvarado expects parliamentary approval of his fiscal reform. | Photo: EFE FILE

Published 24 November 2018

President Carlos Alvarado's Tax Reform Proposal has prompted uninterrupted social rejection since September.

Costa Rica's supreme court ruled, on Friday, that President Carlos Alvarado Quesada's fiscal plan is not unconstitutional. As a result, the parliament is greenlighted to vote a second time on the head of state's controversial reform bill, which was summited through executive power.

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"We must walk towards national unity and we hope to have the project approved in the second debate," President Alvarado said in a press conference late Friday. 

The proposed tax reform will transform the current 13 percent sales tax into a value added tax (VAT), which will enhance the volume of products and services that attract tax.

The bill also seeks changes to the income tax, a tax amnesty and limits to public workers' benefits.

At the beginning of October, the legislative assembly approved the reform bill, which is aimed at reducing the country's fiscal deficit that is threatening to reach 7.2 percent of the gross domestic product (GDP), by the end of 2018. 

"Protests against fiscal reform in Costa Rica are 11 weeks old ... Protesters say that this could become the longest protest in the history of Costa Rica since 1984."

Following the first debate, the project was then sent to the constitutional chamber of the court for review and spiked social mobilizations. The tax reform bill has, so far, prompted workers' strikes, student demonstrations and other civil society protest actions.

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