PARTING SHOT: Another way

Jul 1, 2014

Despite a rising deficit, mounting borrowing costs and currency volatility, Costa Rica can avoid a ratings downgrade, says its new president Luis Guillermo Solís

Over the last 15 years, Costa Rica has attempted many different reforms [to improve the fiscal balance]. None of them were successful. Among other reasons, this was because people didn’t believe that paying more tax would improve their lives.

When you look at the numbers, you find that inequality was increasing, corruption was increasing, and a number of things that had to be done by the government were not being done well.

So we decided to try another way: just do our job, collect taxes better — because tax evasion in Costa Rica is a national sport, reaching around 50% in income tax. That’s too much. We decided to deal with it [via a new tax law, presented to parliament in June).

At the same...

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