The government is waiting: it wants the Legislature to approve the proposed new taxes by March because, due the electoral activities among the political parties, it will be complicated to do it later.
This was admitted by Minister of finance Helio Fallas after a meeting on October 31st with members from Partido Acción Ciudadana (PAC). They intended to discuss the steps to continue with the initiative to create the Value Added Tax (VAT) and the reform of the income tax.
The government is promoting to change the sales tax into a VAT in order to broaden the taxable base and raise the rate to 15%.
Regarding the income tax reform, they also intend to expand its taxable base.
With both initiatives, the Executive aims to reduce the fiscal deficit by almost 2% of the gross domestic product (GDP). According to official estimates, the fiscal imbalance projected by the end of this year is 6% of GDP.
But despite the government’s intentions, lawmakers from the opposition parties such as Partido de Liberación Nacional (PLN), Unidad Social Cristiana (PUSC) and Movimiento Libertario, are not sure that the approval of the new taxes can be achieved within the period the government proposes.