Costa Rica Coffee Guide

PAC Candidate Meets Business Community

October 23, 2009

Citizen’s Action Party presidential candidate Ottón Solís, who led the opposition to the Central American Free Trade Agreement with the United States (CAFTA), spoke Tuesday to the Costa Rican-American Chamber of Commerce (AMCHAM) – whose members are among the country’s strongest proponents of a free market.

In the weeks preceding the nationwide referendum on CAFTA two years ago, Solís often stood apart from the business community, trying to convince Costa Ricans that the terms for an open market laid out in the pact would be harmful to the nation’s institutions and to the economy –especially to small business owners.

But on Tuesday, he stood before a mostly skeptical audience of business leaders, hoping to persuade them that he has their best interest at heart.

“I think he spoke very frankly on the topics we asked him to address,” said Lynda Solar, president of AMCHAM. “Do we agree with him on all things? No, we do not. But I think it is important to look for areas where we do agree in order to resolve those issues.”

Solís, 55, told his audience that he supports foreign investment, but disagrees with some politicians who profess that “it is the answer to all our problems.”

The country can’t just focus on trying to attract as much foreign capital as possible, he said. Instead, he insisted, it should direct its efforts toward preparing a workforce, improving infrastructure and making the state more efficient.

“This is our plan to be more competitive,” he said. “This is how we will attract foreign investment: with efficiency in handling processes, with transparency, with better infrastructure …”

But then came the bad news for the business leaders sitting in a meeting room at the Hotel InterContinental in San José. Solís, an academic and politician as well as planning minister during the first presidency of Oscar Arias (1986-1990), said that foreign businesses cannot continue to escape local taxes.

“It’s very hard to explain when you have a country with so much poverty and problems in education, and there are multinationals who are paying zero percent in income tax,” he said, advocating a progressive tax in which people and businesses on the high end of the income spectrum are taxed more heavily.

AMCHAM’s Solar sounded an alarm at the prospect of taxing foreign companies. “Costa Rica competes with other countries for these multinationals,” she said in a phone interview later that day. “Do you prefer to raise taxes with the possibility that you’ll lose investments, high-paying jobs (and, indirectly, employment) and watch them go elsewhere?”

Solar said that, while AMCHAM does not endorse candidates or take political sides, taxation is a “factor that has to be weighed seriously for Costa Rica to continue to compete.”

 

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