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President Solís says proposals to lower record-high fuel prices are not viable

June 25, 2014

The Public Services Regulatory Authority (ARESEP) sent President Luis Guillermo Solís two proposals for lowering record-high fuel prices: 1) Eliminate fuel taxes and 2) Reduce spending at the National Oil Refinery (RECOPE).

However Solís believes that the tax elimination proposal “is not a valid option considering the harsh fiscal situation the country is facing.”

On Wednesday, the president said that he studied ​​the agency’s proposal but believes the request is “vague and inadequate as it has contradictions,” however he refused to elaborate on what he meant by that. He added that any change in tax policy is something that should be analyzed first by Finance Minister Helio Fallas.

The proposal was presented Monday by ARESEP’s director Dennis Meléndez, who explained that eliminating fuel taxes would reduce gas prices by 30 percent.

However that 30 percent tax is used to fund operations by the National Roadway Council, including road construction and repairs and environmental protection programs.

Finance Vice Minister Fernando Rodríguez also dismissed the tax elimination option considering it “irresponsible and totally impractical.” He said it is not possible to propose a tax reduction as it accounts for 12 percent of tax revenues each year and its elimination would increase the government’s fiscal deficit.

ARESEP Proposals raising gas prices to record-high 

On Thursday ARESEP will hold a public hearing to discuss a new hike in fuel prices that would apply as soon as next week. The hike would be the sixth increase in fuel prices this year.

If approved fuel prices would go up by ₡28, meaning a liter of super gasoline will go from ₡787 to ₡815 ($1.43-1.48) reaching the highest price ever recorded in the country, while Plus gasoline will go from ₡761 to ₡789 ($1.38-1.43). Diesel prices would drop from ₡689 to ₡679 ($1.25-1.23).

Citizens wanting to weigh in on the price hike proposal can attend a public consultation at 4 p.m. Thursday at ARESEP facilities in Escazú, southwest of the capital.

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