Weekly Report - 30 June 2011 (WR-11-26)

COSTA RICA | Chinchilla takes fresh approach. President Laura Chinchilla is making a fresh bid to push through the opposition-controlled legislative assembly an urgently needed fiscal reform package. The recent loss of control of the ruling Partido Liberación Nacional (PLN) over the assembly compelled the Chinchilla administration to consult the quinquepartite opposition alliance, as well as social organisations and trade unions. The finance minister, Fernando Herrera, said the reform would generate additional resources to improve income distribution through social programmes, develop infrastructure, avoid an increase in public debt, and simplify the tax system to reduce evasion. It includes the government's original proposal to replace a 13% sales tax with VAT of 14%, but makes a gesture to the opposition by exempting 233 products in the basic food basket from taxation, in order to protect the poorest sectors of the population.

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