By the A.M. Costa Rica staff

Top ministers held a strategy session Monday to figure out how to get a new tax plan passed in the Asamblea Legislativa. A communique issued after the session said that the plan might go to the legislators within a month. Little is known about the contents of the plan except that the measure is more streamlined than the 400-plus-page document promoted by the Abel Pacheco administration over the last four years. That document, the bipartisan product of a handful of ex-budget ministers, suffered a reverse when the Sala IV constitutional court ruled that legislative leaders rammed the document through the assembly in an unconstitutional way.

The new plan is expected to have at least a proposal for a value-added tax that would be equal to the 13 percent collected in sales tax now. The value-added tax would raise more money because more activities, such as professional work, would be covered. The ministers who met were Guillermo Zúñiga of the budget ministry Hacienda, Francisco de Paula Gutiérrez, president of the Banco Central, and Marco Vargas, who is minister of Coordinación Interinstitucional, a new job. Vargas said in the communique that an exact date to send the document to the legislature is not fixed but that it will be a short time, a month at the most. Vargas said that what is needed is a fiscal plan that is defensible and acceptable to all the parties represented in the assembly. For the last four years Movimiento Libertario used parliamentary procedures and thousands of separate amendments and motions to stall the fiscal plan.

In order to get the document approved, legislative leaders had to resort to a fast track procedure that the high court found insufficient. The Libertarians faced a lot of public and official pressure to withdraw their opposition. Zúñiga, in the communique, said that the plan would first be presented to the legislature and later to other interested groups in society. He said all suggestions and motions would be accepted, but it is hard to see the mechanism for that because the plan by then would be in the hands of the lawmakers. The country needs to face the structural problems of public funding, Zúñiga said. He cited tax fraud, financing the country’s massive internal and external debt and public spending. No matter what the executive branch proposes, the result, if passed, may be very different because the legislature has the power to redraft the bill.

Zúñiga also said that there are other projects of high importance in the legislature, including a redraft of the law for public concessions, loans, modernization of the Instituto Costarricense de Electricidad, opening the telecommunications market to competition, strengthening the Instituto Nacional de Seguros and opening the monopoly in the insurance market.

The government estimates that the country has a debt load of $7 billion. For every colon that flows into the Ministerio de Hacienda, the government spends two colons, financing the difference with debt.

The Central Bank itself has run up $2.8 billion in debt defending the value of the colon over the years. The central bankers want to hand this debt over to the central government, where there are more options for financing. Such a measure is in the legislature.

Officials at the Central Bank have begun talking about letting the colon float on the world market within certain limits by the end of the year. This possibility has caused concern in the expat community and would amount to a dollarization of the Costa Rican economy because hardly anyone would accept colons if they did not know what the currency would be worth tomorrow.

Recent disclosures of special benefits given public employees have irked some in the public. For example, a guard with 31-years of service on the docks at Caldera is getting a $26,000 payoff because the facility is being turned into a concession. The payoff is in addition to any pension benefits.

Similar disclosures were prompted by Sala IV rulings rejecting some benefits. The court acted on appeals filed by the Movimiento Libertario.  There also have been disclosures that President Pacheco funneled millions in cash through the Catholic Church to Limón dockworkers to buy labor peace. The church then was reimbursed by “donations” from owners of agricultural firms who had received settlements for storm damage to their crops.