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Public spending control was consolidated as a central guideline of Laura Fernández‘s administration in Costa Rica. The president ordered all state institutions to adjust their budgets and, in parallel, the Government announced controls and sanctions against smuggling and tax evasion, which according to official data amount to 5.66% of GDP.
n” “n“Here, the money of the people of Costa Rica is sacred. And we are going to ask all institutions, starting with those in-house, those of the Government, but also all branches of the State, to tighten their belts, as we will not allow the waste of resources,” warned Fernández during his weekly conference this Wednesday.
n” “nAusterity measures are combined with an offensive against smuggling and tax evasion. According to official data, the country fails to collect 2.6 trillion colones that do not reach the state coffers. The president was blunt: “Evading taxes has a single word. Stealing,” she noted.
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Reforms, controls and sanctions
n” “nThe Executive branch announced reforms to toughen sanctions against those who participate in smuggling networks or encourage tax evasion. “Today we are also proposing reforms to be able to have much more severe sanctions against all these evaders and those who encourage or participate in this entire smuggling chain,” the president announced, accompanied by the Minister of Finance, Rodrigo Chaves.
n” “nThe offensive includes operations in businesses, such as outlets, where the Ministry of Economy detected irregularities in all inspected locations. Twenty-four businesses in San José, Heredia, Alajuela, and Cartago must correct non-compliance regarding prices, warranties, and labeling, or face fines of up to 18 million colones, it warned.
n” “nThe Executive announced reforms to toughen sanctions against those who participate in smuggling networks or encourage tax evasion. . (Illustrative Image Infobae)
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The authorities remarked: “That the price shown on the label is the one you finally pay at the register, that the quality you buy is the optimal one”.
The weight of smuggling and evasion
n” “nAuthorities consider that smuggling and tax evasion are no longer isolated actions, but the result of “criminal networks” that move large sums and finance other crimes. The Minister of Finance illustrated the magnitude of the problem: “In cigarettes, we have almost 55% of the market with smuggled products. In spirits, we also have a very significant amount,” said the Minister of Finance.
n” “nThe detected tactics include invoice manipulation, under-invoicing, concealment of goods, and false declarations regarding import values. The case of video game consoles shows how the evasion of the selective consumption tax, close to 30%, distorts official import figures compared to actual consumption.
n” “nFernández highlighted the consequences for those who comply with the law: “The entrepreneur who complies competes at a disadvantage. The worker who pays taxes ends up financing the one who does not. And the honest citizen is the one who ends up losing.”
n” “nHe also insisted that the country does not require new taxes, but rather the fulfillment of existing obligations. The actions are part of the operations against smuggling on national routes. Courtesy: MSP
n” “nTechnology and Government warnings
n” “nTo combat smuggling, the Government will implement technologies developed by the Mossad of Israel. The Minister of Finance referred to the magnitude of the phenomenon: “I am not going to reveal more details, Madam President, just to tell you that in a country where 50% of the cigarettes people smoke are smuggled, 50% or more of the whiskey, of the liquors that Costa Ricans drink, are smuggled. That must be changed.”
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Fernández issued a direct warning: “Whoever steals from the treasury steals from the Costa Ricans. And in this government, we are coming for them.” The head of the Treasury reinforced that stance: “Evaders, Ms. Laura is coming for you and I am going to help her with everything,” he added.
n” “nThe president also linked smuggling to the harm caused to small merchants: “Smuggling has bankrupted merchants in this country. There are people who have invested all their capital, all their assets to have a small business, and smuggling has bankrupted them. It has bankrupted them because they are competing like a tied donkey against a loose tiger, and that is not fair. So, as Mr. Rodrigo very well points out, we are coming for you. Whoever steals taxes is a thief, because they are stealing resources from the national budget, which belongs to all Costa Ricans, and we are not going to tolerate it,” warned President Fernández.
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