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salish sea

Moody's and CR Deficit -- predictions?

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Hi everyone,

 

If there is any interest in this issue (other than possibly newman and me), there was an article in this morning's Inside Costa Rica about Moody's holding off on downgrading CR's bond rating, pending a possible change in CR tax structure. (article link is:http://insidecostarica.com/2013/09/23/moodys-warns-costa-rica-time-running-fiscal-reform/ )

 

My question, especially for those who have lived here a while, is: What do you think the CR government will do? Clearly they can't balance their budget based on collections solely from expats. Do you think they'll finally do a better job with enforcement? Add a VAT or other tax? Something else entirely? Just ignore it and do nothing?

 

What do you think?

 

regards,

Gayle

Edited by salish sea

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Hi everyone,

 

If there is any interest in this issue (other than possibly newman and me), there was an article in this morning's Inside Costa Rica about Moody's holding off on downgrading CR's bond rating, pending a possible change in CR tax structure. (article link is:http://insidecostarica.com/2013/09/23/moodys-warns-costa-rica-time-running-fiscal-reform/ )

 

My question, especially for those who have lived here a while, is: What do you think the CR government will do? Clearly they can't balance their budget based on collections solely from expats. Do you think they'll finally do a better job with enforcement? Add a VAT or other tax? Something else entirely? Just ignore it and do nothing?

 

What do you think?

 

regards,

Gayle

 

I am interested in hearing your opinions ... I won't be investing in CR (house, car, business) until I am sure they are stable. It seems that Expats think they are important but they appear to make up a very small percent of the population and many of those are not legal and could pick up and leave at any time. So, I agree any hope that expats would close the budget will be a failure. Now, I am guessing there is a lot of property owned by foreigners (luxury tax) who do not live in CR that might have some potential since those owners can not extract their property easily and have no political influence. They would make better targets but that will cause an outflow of capital and a depression of real estate prices. Personally, I am optimistic for CR since their financial problems appear to be mismanagement and inefficiency which can be solved easier than other problems. I am guessing as they tighten on the banks and encourage electronic payments there will be fewer places for tax evaders to hide thus increasing tax collections.

Edited by jimvignola

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They will probably find a way to impose more taxes and increase the ones that we already have. Laura has been doing this since her presidency. God forbid they cut down on the lavish benefits and salaries on many government employees. Just my thoughts, I am sure others have different opinions

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There is a lot of money in CR and it's not all owned by expats. Look at the high-priced new-ish cars on the road! A small percentage of them are driven by expats. Now for my point: I'll bet a high percentage of those Ticos pay their fair share of taxes. It is considered somewhat of a game to see how little they can pay! If the government were to do a better job of collecting those back taxes there possible might not be such a deficit.

 

Aso, I get very tired of hearing expats complain about taxes here, when they are a very small percentage of what they would be paying in their own country. Many of them not only complain but they do everything they can to cheat the government. Shameful!

 

The next time this government borrows money it should be used for nothing else but following up on and collecting back taxes. Then they could pay off the loans and have some left over for important expenditures. My opinion.

 

I agree with the person who mentioned lowering the extravagant salaries and benefits of many government employees.

Edited by Shea

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Huge tracts of agricultural land are owned by Costa Ricans.

Huge tracts with very little taxes paid on them.

Most of the luxurious properties here are owned by Costa Ricans and who should be paying the 'so called luxury tax' but are not.,,,but the middle class probably are much more likely to do so.

Exstranjeros with money are but a drop in the bucket...compared to the rich families that are the toast of the country.

 

But this is probably the same in most countries.

 

I wonder how much land tax Bill Gates has to pay on his property in Playa del Coco... ;)

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SCORP and Shea, what percentage of public spending is it that you attribute to lavish public employee compensation? To be sure, there are a few examples of what appear to be excesses, but what do you suppose the average clerk at Immigration, COSEVI, the Ministry of Health or a Fuerza Publica officer earns? And when was the last time either of you worked for an eqivalent wage?

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I agree there are also many government employees may not have a lavish benefit package and salary, but most likely more than the average working Costa Rican who does not work for the government. I also agree that the government should put much more effort to start to collect the taxes that are due. I know many government employees that are pretty well off with good benefits and many ordinary workers who can hardly get by. Eqivalent wage is not the question, reducing expenses. Many other countries have had the same problem with high salaries, great benefits and wonderful retirement programs and had to deal with it or go broke.

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Interesting, SCORP.

 

What's the actual number of Costa Rican public employees with whom you are personally acquainted . . the "many" to whom you refer?

 

And what percentage of all Costa Rican public employees does that represent?

 

And how have you come to be so intimately privvy to their personal affairs!

 

And do you share the details of your own personal life with them all?

Edited by David C. Murray

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I thought I remember the CAJA hired a number of nurses a few years back when unemployment was high as part of a full employment program that bankrupted the CAJA. So, the salaries were not high. There were just too many unneeded employees. I am guessing that is the problem with many governments of having too many people on the payroll.

 

a side note ... my Tico neighbor was commenting he does not know where all the money is coming from ... when he returns to CR, he said he is seeing more and more cars each year and many of them are luxury brands .....

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I wish I could remember where I saw an article stating how many public employees in CR make more than 10,000 dollars a month. It was in the thousands. Doesn't matter really. I just know from reading in several different sources (I don't remember sources but here are the publications I read: Tico Times, amcostarica.com, insidecostarica.com and qcostarica.com) that it is a game among some Costa Ricans (not just the wealthy ones) to see how much tax they can avoid paying in spite of what they owe, by underreporting income, getting paid under the table, underreporting income from sale of property, etc.

 

As for the expats, I agree that the taxes they avoid illegally are a drop in the bucket. The point is that they are liars and cheats at the expense of this country. I read many years ago that one expat reported the price he paid for his home as one cent. I wonder if he was one of the people who complain about the lousy roads, bridges, etc., and asking why the government doesn't do something about it.

 

All of those drops in the bucket combined would add up to a huge amount of money and the government should be out there collecting that money. If anyone with half a brain had been looking, the one-cent cost of a new home would have jumped off the page. Avoiding taxes is NOT a game.

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