Updated: Mar 23, 2020
Latin America's political landscape is exalted in extremes of "socialismo" manipulated into partisan approaches towards American economic; however, most know Costa Rica as the utopia of the all the Americas. From economic preservation to ecological sustainability, the political landscape has recently gained popularity for it's latest progression with not only a presidential cabinet full of women, but for it's election of Latin America's first Afro Latina Vice President. In recent interviews, Vice President, Epsy Campbell Barr, uses her platform to discuss a variety of social issues from Nicaraguan immigration to women in politics, but the most controversial would arguably be her advocacy for the new tax laws.
Avoiding the long deferred need for initiative to address possible inflation of the colon, the new tax law makes a shift from the abundance of government worker benefits and lose tax laws by introducing new Value Added Tax, Income Tax, Capital Gains Tax, Rental Income Tax, Severance pay and incentive caps.
Recent protests by government workers demonstrate outrage, but this isn't your everyday socialismo tax shift in Latin America. Before the introduction of the new tax law government employees were traditionally not experiencing the reduction they are now with incentive caps. For intense, a court clerk making a lower salary of 1,174,000 colones (suitable for the cost of living) was previously able to increase their salary by 56% with incentives. This has now been capped at 25%. Severance pay from the government sector has gone from 20 years to be aligned with the private sector at 8 years.
Income Tax for corporations:
Gross income of 5,000,000 colones and below - 5%
Gross income up to 7,500,000 colones - 10%
Gross income up to 10,000,000 colones - 15%
Gross income over 10,000,000 colones - 20%
Income Tax for for individuals:
1,999,999 to 2,103,000 - 15%
2,103,00 to 4,205,000 - 20%
4,205,000 and up - 25%
Capital Gain Tax is at 15% and primary residence is only tax exemption. Rental Income is exempt up to 648,000 colones above that the VAT tax is 13%
The Tax Shift and the Afro Latinx population:
With attempts to balance the private and public sectors, the tax reform has now evened the playing field for local and foreign investment and potential benefit the small minority group who mostly resides of the Caribbean coastal regions and are heavily dependent on ecotourism and port jobs due to lack of education as result of census inclusion updates. Now that economically the government has more control over spending, racial and gender inclusion being represented by Epsy's economic participation. There is hope yet for the not only the tactics of government intervention in Latin America, but the economic advancement for Afro Latinxs across the Americas.