Costa Rica's Interim Tax Plan To Go Before Full National Assembly

by Mike Godfrey, Tax-News.com, Washington

17 October 2002

It has emerged that the controversial temporary tax proposals put forward by the Costa Rican special tax commission have now been approved, and are ready to go before the full Asemblea Nacional.

The tax proposals are designed to last for one year, while the government considers permanent measures to plug the widening tax gap, and include a 5% increase to the 40% corporate tax rate, increases in 'sin taxes' on products such as alcohol and cigarettes, increases in highway tolls, the introduction of a new tax on corporations which would average around $200 per company, per year, a 50% luxury tax to be imposed on expensive cars, and a $50 annual tax on mobile telephones.

However, it is the $500 tax on computer terminals used to place internet bets, and $500 monthly charge for casinos per slot machine which have caused the most controversy, with sportsbook operators threatening to leave the country rather than pay the new taxes.

Last week, during protests held outside the Asemblea Nacional, the gambling operators warned that: 'all of Costa Rica will pay for this error of the government. The [cash] cows will go to Belize, Nicaragua and Panama.'

Local news provider, AM Costa Rica revealed on Wednesday that the plan approved by the committee has received the support of three of the country's four major political parties, and is also favoured by the Costa Rican President, Abel Pacheco.

However, the Movimento Libertario did not approve the plan, according to AM Costa Rica, and many consider submitting a minority report. The party has also publicly urged sportsbook employees to contact lawmakers, protesting the burden of the proposed taxes.

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