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Proposed Luxury Home Tax Would Aid Slum-dwellers

June 9, 2006

Owners of luxury homes in Costa Rica may soon face a new tax, the proceeds of which would be used to improve conditions for slum dwellers, President Oscar Arias announced Monday.

The country has “39,000 families living in shantytowns. The idea is to move at least 50% of those (to better housing) in the next four years,” Arias said, speaking to reporters during a press conference at Juan Santamaría International Airport before he left for Europe (see separate article).

The tax is a new addition to a bill presented during the last legislative term by Social Christian Unity Party (PUSC) legislator Rodolfo Delgado. The law would allow the Housing Mortgage Bank (BAHNVI) to invest ¢10 billion ($19.6 million) to help eradicate shantytowns, or tugurios.

The proposed law would allow BAHNVI to assign up to 50% of the annual income of the Housing Subsidies Fund (FOSUVI) to shantytowns.

The tax Arias proposed on luxury houses would help pay for the increased funding provided to FOSUVI, said Fernando Fernández, spokesman for the Housing Ministry. The tax rate and the definition of a luxury home have not been finalized.

The Legislative Assembly is split over Delgado’s bill, the daily La Nación reported.

The Libertarian Movement Party and Citizen Action Party (PAC) say the bill does not include controls to ensure the quality of construction or selection of beneficiaries, while PUSC and the National Liberation Party (PLN), which support the bill, claim it would help eradicate shantytowns and additional controls could be defined once the bill is passed.

Housing Minister Fernando Zumbado, who is also the president of BAHNVI’s board of directors, said that the regulations created for the application of the law would include the controls the bill’s critics have mentioned, La Nación reported.

Housing Ministry statistics show that Costa Rica is home to 402 shantytowns, classified as groupings of approximately five families and up where housing conditions do not meet basic health requirements. Of these settlements, 70% are in the greater San José area.Many shantytowns are also classified as precarios, where people live on land that does not belong to them (TT, April 28).

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