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Are Taxes in Costa Rica Worthless?

Article Summary:

Costa Rica’s chaotic, complex, disproportionate, and ineffective tax system is in desperate need of reform, because as it stands, the system’s inefficiency hinders competitiveness and encourages tax evasion and smuggling.

Photo Credit: News CR

Original Article Text From el Financiero CR via Google Translate :

A Tax Reform

We need tax reform. We have a lot of taxes, which have been established over the years, some of them respond to old concepts and, in general, their goal has been eminently recaudatorio, others are the result of occurrences to fund specific programs or entities.

The result is a chaotic, complex, unfair, disproportionate, inequitable, inefficient, adversely affecting people, development, competitiveness, encourages smuggling and evasion in general. This system has a very high management cost, inefficient and ineffective.

To make a tax reform, as appropriate, the Government should undertake a strategic planning process, approve a plan and reach consensus with the various political forces, and then according to that plan, develop bills with the participation of specialists to legislation have clear, transparent, simple and easy to apply by the administrator and the taxpayer.

The tax system is adopted should consist of low taxes, a reasonably low rates. It should establish specific and periodic statements for the Government, with a high level of control at a low cost, high revenue and achieve a minimum decline to evasion.

For us to achieve nearly 100% collection, broadening the tax base through economic development and universalization of taxes on goods and services and on income and profits.

Everyone should pay taxes, we must abandon harmful practices of exceptions and exemptions, leading to higher rates. Taxes affect us all in some way or another, so we must keep firmly to the lobbyists. The assistance we provide to disadvantaged people or activities can be carried out through the revision of minimum wages and by specific grants from the Government.

If all goods and services, all income and all the people, activities and nonprofit entities are taxed, take a step forward in strengthening civic awareness and culture of paying taxes, of all the inhabitants of the country.

In wrongly, the authorities seek to solve the problems of evasion through legislation loaded with heavy penalties, the taxpayer demands and hiring more police prosecutors and auditors, worsening the fiscal situation of the country, without getting all pay taxes.

What other and what not
Of the four major taxes on the value of the collection, the sales and income, have serious deficiencies, and the fuel consumption and selective have disproportionate negative effects and are harmful to the development and competitiveness, by which must be removed.

Some taxes border on the ridiculous, as the bells of professional associations and other entities and, in some cases, the emission value exceeds the fund value. Many others are occurrences, such as ring education and culture, the corporate tax, the tax on casinos and fishing taxes.

A general review of existing taxes, leads us to believe that the tax system should be composed of the following:

Value added tax of around 8% on all goods and services, income tax, at a rate of about 15% and all taxable income; duties, Central uniform tariff, tax on vehicle ownership , aircraft, etc..; tax forms for CCSS, FODESAF, IMAS, INA and Banco Popular, property tax and real estate tax patent for municipalities.

This scheme would produce a greater revenue than the current system would have a caring, fair and equitable development and competitiveness occur, would better control, diminish smuggling and evasion, would have a law simple, clear, transparent, and eliminate many steps the benefit of the Government and taxpayers.

Of course, before adopting such a strategy, it must make detailed computations to estimate the value of the collection and, with it, meeting the needs of a well organized and efficient.

Link to Original Article:

From el Financiero CR

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