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News > Latin America

Costa Rican Lawmakers May Vote On President's Tax Law Next Week

  • Public employees in a 3rd week of strikes against the tax proposal under discussion in San Jose, Costa Rica Sept. 26, 2018. The sign reads

    Public employees in a 3rd week of strikes against the tax proposal under discussion in San Jose, Costa Rica Sept. 26, 2018. The sign reads "fiscal plan equal poverty" | Photo: Reuters

Published 3 October 2018

Left-leaning Costa Rican legislators say they won't accept the government's tax reform that seeks to cut the deficit at the cost of the working class, poor. 

Costa Rica’s Legislative Assembly continues to debate the country’s tax reform bill introduced weeks ago by President Carlos Alvarado as protests to the fiscal changes continue into their 24th day.

Costa Rica: Tens of Thousands March Against Fiscal Reform

Legislators for the center-right parties Citizen Action (PAC), National Liberation (PLN) and Social Christian Unity (PUSC) are trying to move the PAC-initiated bill forward which includes the creation of a 13 percent value-added tax to replace the current sales tax, and expanding tax collection to the service sector and a one percent tax on some basic living goods and food items.

Another controversial sticking point within the proposal is a-50 percent reduction in bonuses, salary caps, and severance pay time limits for public sector workers.

Members from the PAC, PLN, and PUSC are trying to get a vote on the first part of the so-called Strengthening Public Finance bill by the end of this week. However, members of left-leaning parties, Broad Front, National Renewal and National Integration parties said Tuesday during a full debate they won't accept the tax increases for the poor or the changes that limit state workers' labor rights.

After five days of negotiations, talks between national unions and the Alvarado administration broke down last Tuesday after the government refused to budge on eliminating the basic goods tax and insisted on limiting state worker concessions brought about by collective bargaining.

The government also wanted unions and social organizations to cease their national strike during dialogues, which unions refused to do.

Last week the National Union Alliance (NUA) lamented the government's rejection of all three of their tributary reform proposals. “After five days of conversations and three proposals presented by the Social and Workers Unity, the government was incapable, until today, of reaching an agreement.”

The unions' main bill, known as the Justice and Solidarity Tax Reform, focuses on combating tax evasion and fraud, increasing taxes on companies and banks that generate extraordinary profits, eliminating "luxury" pensions for former presidents, and reducing state financial support for political parties.

In a statement released Tuesday by the Broad Front, the party said it “regrets” that the dialogue between the government and unions broke down saying it was because of the uncompromising attitude of the Carlos Alvarado government “that the negotiations were not successful."

The party said they stand for a progressive tax structure where the rich pay what befits the rich and the poor as the poor. The Broad Front said they want authorities to put an end to fiscal fraud, which they say, is the main cause of the country’s rising deficit that sits at over six percent of Costa Rica’s gross domestic product (GDP). They added that the government is trying to make the working class pay for the corruption of the most powerful.

The leftist party said they stand together with unions and movements in their protests against the government’s bill. "We invite all our affiliates in the country, and the entire population in general, to join the different forms of struggle and collective protest actions that are carried out from the communities," their collective statement said.

Costa Rica's protests and strikes that began Sept.10 are continuing this week.

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