Has Costa Rica’s Fiscal Reform Plan Finally Died?

by Mike Godfrey, Tax-News.com, Washington

23 August 2004

According to a report in the national press, two members of the Legislative Assembly's fiscal reform commission believe Costa Rica’s long-awaited fiscal reform package has no chance of making the statute book.

“The fiscal plan is dead,” remarked Patriotic Bloc legislative deputy Humberto Arce, a member of several of the commissions that have studied and modified the plan, according to the Tico Times. Arce believes that the court currently investigating alleged procedural irregularities in the debating of the tax reforms will call a halt to progress of the package.

Last month, the Constitutional Chamber of the Supreme Court, Sala IV, accepted an action by two deputies who charged that the former president of the Legislative Assembly, Mario Redondo, violated the Constitution by acting with secrecy and without the required approval of two-thirds of lawmakers last March in an attempt to accelerate the debate on the tax plan.

If the justices of the Sala IV rule against Redondo's actions, all changes made to the plan since March would have to be annulled.

Federico Malavassi, a commission member and opponent of the tax plan concurred with Arce's view. “It has died. It was killed by Mario Redondo and his gang,” Tico Times quoted him as saying.

However, Rendondo, the ruling Social Christian Unity Party deputy and a supporter of the plan reckons to have enough votes to steer the tax reforms through. “We'll keep moving forward with the plan because it's a crucial reform that the country needs.”

The Permanent Fiscal Reform Plan was first conceived two years ago to bolster the government’s tax revenues, pay off the country’s growing foreign debt, and reduce the deficit to 2.65% of GDP through a series of tax hikes and improved collection methods.

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