Costa Rica has been able to transform its productive structure, and its achievements in forging a welfare state with greater equality and human development have been an example for all of Latin America. Now they must be defended with a comprehensive and timely fiscal reform, Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), said during a two-day working visit to the Central American country.
At the start of her visit on Thursday, ECLAC’s most senior representative met with the country’s Vice President and Finance Minister, Helio Fallas, to review the collaboration that this organization provides to Costa Rica. Bárcena also gave a conference at the Central American Bank for Economic Integration (CABEI) and attended the 25th session of the University for Peace’s Council. During these activities she was accompanied by Hugo Beteta, Director of ECLAC’s Sub-Regional Headquarters in Mexico.
At the CABEI, the senior United Nations official participated in a conference along with Alberto Cortés, that institution’s Director for Costa Rica; Felipe Alpízar, Director of the Research and Political Studies Center at the University of Costa Rica; and Alberto Soto, Director of the Economic Research Institute at the same university. Other participants included Olivier Castro, the Central Bank President, and Welmer Ramos, Costa Rica’s Economy Minister, along with other government officials and various lawmakers.
During her presentation, the Executive Secretary indicated that Costa Rica’s fiscal deficit has structural roots and originated from the elimination of duties on foreign trade, fiscal incentives and spending layouts approved by Congress that were not accompanied by adequate income.
In that context, she praised the fiscal reform that the government is undertaking with the aim of increasing the tax burden, fighting fraud, transforming the current sales tax into a Value Added Tax (VAT), modifying income tax and putting an end to some fiscal exemptions. “Costa Rica needs fiscal reform to maintain what has been achieved,” Alicia Bárcena stressed.
In the case of Latin America and the Caribbean, the Executive Secretary said that the region collects few taxes and does so poorly, with taxation levels of around 20% versus rates of over 30% in the countries belonging to the Organization for Economic Cooperation and Development (OECD). In addition, regressive structures prevail, with a low overall tax burden and widespread exemptions, while social spending has a low redistributive impact.
This is compounded by the problem of tax evasion and circumvention. In that sense, Bárcena pointed out that illicit flows leaving Latin America and the Caribbean amount to 150 billion dollars, or double the income from remittances (around 63 billion dollars) and fifteen times greater than official development aid (around 10 billion dollars).
After the conference, ECLAC’s Executive Secretary went to the University for Peace to participate on Thursday and Friday in the 25th session of the institution’s Council. Alicia Bárcena was received by the rector, Francisco Rojas, and Vice President, Hal Philip Klepak.
The University for Peace is an academic institution dependent on the United Nations, which was founded in 1980 and is headquartered in Ciudad Colón. Bárcena was scheduled to hold talks with professors and students and attend the celebration of the university’s 35th anniversary.
