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Tax hikes send Tico farmers to the streets

July 27, 2012

From the print edition

By T.J. Gilles | Special to The Tico Times

Costa Rican farmers will be taking to the streets outside the Legislative Assembly next week to demand huge tax cuts on agricultural lands.

Organizations of farmers, cooperatives and agribusiness say that without an 80 percent decrease in impending taxes fomented by a 2007 reform, rural Costa Rica as it has come to be known may go the way of the golden toad and other endangered life forms.

Álvaro Sáenz of the National Agroindustry Chamber (CNAA) called the tax hikes “a species of inverted agrarian reform” that would mean “producers who can’t pay the new tributes will end up losing their means of subsistence.”

At a news conference in San José to announce protests scheduled for July 31 in the nation’s capital, Guido Vargas, of UPA Nacional, an organization of small- and medium-sized producers, said the demonstrations beginning on Tuesday will be “the biggest we have seen in this country.” He added that producers and their supporters are ready to camp outside the assembly until they achieve tax relief that can keep the country’s agriculture viable and competitive.

Vargas said: “We need to make it clear that this struggle isn’t only for the benefit of farmers but for the benefit of all society. There is nothing more important than food security.”

According to Guillermo Vargas, of the Monteverde Institute, Costa Rica imports the vast majority of such daily staples as rice and beans. “Eighty percent of our beans are imported from such places as Nicaragua and China,” he said. 

Jesús Villalobos, of the National Council of Cooperatives (CONACOOP), said, “We need to increase our production, our innovation [and] our research and development.” Looming tax hikes will put such investments on the back burner and put Costa Rica on the slippery slope of uncompetitiveness in many commodities, he added.

CNAA’s Sáenz said the taxes will affect some 680,000 rural families who may be forced to abandon their holdings and seek wage-earning elsewhere.

In a letter in the daily La Nación on May 15 (the “Day of the Farmer”), CNAA, UPA Nacional and CONACOOP described the tax law as “irrational and confiscatory” and “agrarian reform in reverse.”

The complicated formula has 10 factors for valuing farmland – most of them unrelated to current use or production capacity, the letter said.

The letter also said new taxes would result in “the insolvency of many producers” who face tax burdens as much as 10-fold, and “many will see themselves forced from their activities.”

Sáenz said not only little farms are at risk.

“Big plantations, many of them owned by cooperatives, are going to go broke. The big companies are going to go to other countries to produce,” Sáenz said. “Pineapple growers are going to go to Colombia, [and] banana growers will go to Honduras and Guatemala, creating great poverty in rural Costa Rica.”

Villalobos said the “unjust” tax law values forest, pasture and cropland on par with “land dedicated to commercial businesses, residences and five-star hotels.”

Lawmakers, however, said that another tax bill, dedicated to preserving agricultural land, could allow a tax reduction of 50 percent if passed.

The National Union of Local Governments (UNGL) said a reduction of 40 percent might be feasible, but both are far from the 80 percent cut that will be demanded by protesters.

In a statement, UNGL said it wants no proposal that “will affect the incomes of municipalities, especially rural cantons.”

“It is important to us to approve projects that truly fortify the municipality,” the statement said. “We will continue fighting … to bring better services to the diverse sectors and citizens of the country.”

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