Costa Rica Coffee Guide

Legislative Support for Fiscal Reform in Question

June 24, 2005

THE future of the Permanent FiscalReform Plan became a little dimmer thisweek when some members of the CitizenAction Party (PAC) and the SocialChristian Unity Party (PUSC) announcedthey may not vote to approve the long awaitedtax package.PAC legislator Epsy Campbell, whohas in the past supported the tax plan,announced that if certain changes aremade to the plan she may pull her supportand leave her seat on the fiscal commissioncurrently debating it, the daily LaNación reported.Campbell says the 1,635 motionsbeing considered by the commissioninclude changes to the plan’s text that distortthe original objective of the initiative.These include a large quantity of exemptionsto the value-added tax (IVA), theelimination of a commission of notablesin charge of overseeing the plan’s implementation,and rules regarding violationof fiscal regulations by public figures,according to La Nación.Divisions continued in the ruling party,PUSC, over the fiscal reform plan, meantto overhaul the country’s tax system.On Wednesday, a group of PUSC legislatorsasked President Abel Pacheco to presentalternatives in case of the plan’s failure,such as a two-year “contingency plan” toround up more government revenues withoutpermanently changing the nation’s taxstructure, according to La Nación.Libertarian legislator FedericoMalavassi, who opposes the plan, told thedaily that PUSC legislators are using theirinternal argument as a way of avoidingthe political risk of raising taxes in anelection year, particularly if the increasedresources will only be left to the presumedvictor of next February’s nationalelections – the opposition NationalLiberation Party.

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