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Supreme Court contradicts president, says no ruling yet on tax reform plan

March 27, 2012

The president of the Constitutional Chamber of the Supreme Court (Sala VI) denied Wednesday that a ruling has been made on the on the constitutionality of the tax reform bill, according to Radio Reloj. On Tuesday night, President Laura Chinchilla announced on her twitter account Tuesday night that the Sala IV approved the plan.

“The Sala IV rejected a constitutional challenge against special legislative procedure,” Chinchilla wrote. “A triumph against lawmaker filibustering.”

However, Sala IV Chief Judge Ana Virginia Calzada said the court is planning on an exhaustive review of the bill, and a ruling might not come until the first week of May.

Lawmakers approved the fiscal package in the first debate by a 31 to 19 vote March 14, but immediately after the victory for Chinchilla’s administration, opponents petitioned the bill’s constitutionality and asked the Supreme Court to review it.

The main purpose of the bill is to make tax collection 1.5 percent of gross domestic product. The most important maneuver proposed to accomplish that is an increase from a 13 percent sales tax to a 14 percent value-added tax.

Passing a fiscal reform bill remains one of Chinchilla’s utmost priorities. However, the legislation has been delayed for more than a year.

Government debt is nearing 6 percent of GDP, and the gap is expected to widen, possibly to 10 percent if reforms are not passed by 2014, according to Central Bank officials. The result of the increasing gap could be economic calamity. While tax increases could generate an additional $850 million in annual revenue.

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