LatinNews Daily - 30 May 2023

In brief: Chaves’ tax proposals prove contentious in Costa Rica

* Costa Rica’s national tourism chamber (Canatur) has rejected a proposed legislative package unveiled by President Rodrigo Chaves on 18 May aimed at fiscal sustainability. The five proposed measures cover income tax, vehicle ownership, exonerations, issuance of foreign debt, as well as seeking to strengthen tools for tax collection and sanctions. The Chaves government says that the aim is to distribute tax burden more fairly, rather than create new taxes. Chaves said that more measures were needed despite fiscal progress (although this has been largely attributed to a fiscal reform introduced by Chaves’ predecessor, Carlos Alvarado [2018-2022]). Canatur objected to the proposed increase to value added tax (VAT) on airline tickets from 4% of the 10% of the ticket’s value to 13% of the entire amount, although Finance Minister Nogui Acosta has since said that this will be revisited. In a statement warning that the changes deal a blow to the middle class and small and medium-sized enterprises (SMEs), Canatur’s president Rubén Acón said the “tourism sector requires incentives… to accelerate its recovery” following the “serious impact of the coronavirus (Covid-19) pandemic…but the announcement of the fiscal measures is a step in the opposite direction”. Echoing complaints raised by other private sector lobbies, Acón stated the proposed changes would “reduce the country’s competitivity and put it at a disadvantage in relation to other tourism destinations”. The government lacks a majority in the 57-member unicameral legislature and will likely face a battle to get the package approved.

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