Costa Rica Digest, Jan. 4

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Costa Rica News Digest
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TODAY'S CONTENTS
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Feature Article:
Tax collector throws citizens yet another curve


*News Digest

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FEATURE ARTICLE
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*Tax collector throws citizens yet another curve
By the A.M. Costa Rica staff

Visit AM Costa Rica on the web at: http://www.amcostarica.com

Residents and businesses that received notices of taxes due during the last

weeks of December may have lost their right to appeal because the tax

collector had a trick up his sleeve.

When faced with a demand for payment, taxpayers who do not think they owe
the

money have 15 working days to appeal. Outwardly, the tax collecting agency,

Tributación Directa, appeared to have closed with the rest of the executive

branch Dec. 24.

But a skeleton crew kept open a small office, allowing the appeals period to

expire before taxpayers could exercise their right.

The main telephones at Tributación Directa said all last week that the
agency

in western San José was closed. But a messenger found that the

Administrativo Tributaria de San José remained open. This is the office that

actually collected unpaid tax money.

The tax collector distributed a number of demands for payment during the

second full week of December. One person who received such a demand was
expat

businessman Garland M. Baker, who writes tax and real estate articles for

A.M. Costa Rica.

Baker is involved in a dispute over taxes involving a boat used in tourism.

Because the dispute has been going on since 1998, the amount involved,

including interest and penalties, is more than $100,000.

Baker said that the company he represents does not owe the tax, and he can

show an official document from Tributación and also the Ministerio de Obras

Públicas y Transportes saying the boat should not be taxed.

Nevertheless, the collecting arm of Tributación has been trying to get the

money and served
Baker with a collection notice Dec. 13. He had 15 working days to

file an appeal with the Tribunal Fiscal Administrativo, an internal appeals

panel.

Baker thought that his appeal had a deadline of Jan. 10 because he figured
in

the governmental vacation days. Instead, because the small office was open,

his appeal is due today. Had he not filed an appeal, as he did Monday, he

would have lost the case by default.

"If I had gone on vacation, I would have lost the case," he said Monday.

Baker termed the tax agency's conduct duplicitous and said he wondered how

many other taxpayers will miss their deadlines simply because they do not

know Tributación managed to keep the clock running on appeals.

Baker said he found out the office was open because an aide called a

telephone number printed in small letters in a footnote on the demand for

payment. A messenger later verified the office was working regular business

hours.

The Dec. 25-Jan. 2 vacation for executive branch workers was ordered by

President Abel Pacheco's cabinet in December. Presumably employees in the

bill-collecting unit are considered essential as are physicians, police and

firemen.

Many businesses close for Christmas and New Year's vacation, and lawyers,

accountants and other professional help is scarce.

This the second time in a month that Tributación caught taxpayers with

unexpected deadlines. The agency applied an obscure part of the law to

require annual income tax reports to be filed by Dec. 15. The usual deadline

has been Dec. 31. There was no publicity on the change, and a fine is levied

for late filing.

COMMENT: We find this action utterly despicable, but aren't surprised. This

kind of outrageous behavior and treating people like trash, and attempting
to

grab every penny from Costa Ricans and foreign investors alike has

characterized this excreble administration from day 1. They seem to feel

that they are above the law and can rape, pillage, and steal with impunity.

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DISCUSSION
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NEWS DIGEST
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*Street Vendors Removed

As the holiday season came to an end so did the stalls that lined several

streets of downtown San José, as the Municipality made good on it's long

efforts to end the "chinamos".

The battle has been going on for years. Vendors who have taken over the

sidewalks of Calles 2 and 10 between Avenidas 1, 3 and 5 between on the

North side and Avenidas 4, 6 and 8 on the South Side were removed by

Municipal workers and police shortly after midnight Monday morning.

The Municipality had made a strong show of force several months back when it

had decided that enough was enough and had warned the Vendors that would be

removed by force if they resisted. However, several appeals to the courts

stayed the Municipalities' efforts.

In early December all the courts had rendered their decisions and had ruled

in favour of the Municipality. An appeal by the Vendors swayed San José

Mayor, Johhny Araya, to stay any action during the holiday season.

A few minutes after midnight Monday, municipal trucks and backhoes descended

on the "Zona de Truega" as it was called and started removed any and all

illegal stalls and structures.

The operation was peaceful as tearful Vendors watched what for many had been

their livelihood for many years. Cries and screams from the women asking

Municipal officials how now they would feed their families could be heard as

television cameras reported live.

Affected are 466 Vendors who later in the morning took the streets in

protest, filling Avenida Segunda, heading east to the Plaza de la Democracia

and then west on Avenida Central (the Boulevard) back to their starting

point.

Retailers and businesses along the protest route closed their doors and

rolled down their steel shutters in fear of violence. The protest was

peaceful with a score of police officers from the Municipality and Fuerza

Publica on hand, while Transit police re-routed traffic.

The move, according to Mayor Araya, is to 'rejuvenate' the downtown core.
The

Municipality of San José, along with the Fuerza y Luz and ICE have been

working on burying all overheard electrical and telephone cables, and

enforcing signage controls in an effort to clean up the area.

Araya told television cameras that the decision to remove the Street Vendors

was not an easy one and now it will just as difficult to keep them out. He

also said he hopes that many of the retailers and businesses in the area
will

now take the initiative to renovate and modernize their storefronts.


*Donations, President Investigated

The Prosecutor's Office confirmed that it has re-opened an investigation of

President Abel Pacheco and several members of his campaign in relation to

illegal donations.

The investigation is in its first stage. If the prosecutors find evidence to

continue the case, they will request that President Pacheco's immunity be

lifted, confirmed Fabian Barrantes, a spokesman for the Ministry of Justice.

For his part, President Pacheco arrived early at Casa Presidencial Monday

morning after his holiday vacation in Spain and an undisclosed Caribbean

country and announced on Radio Monumental that he will give testimony before

the Fiscalía (prosecutor's office) if he is called.

Pacheco says he is convinced he has done nothing wrong, has committed no

crime and is open to any type of investigation.
..
The case involves donations from foreign firms that were not reported to the

Supreme Elections Tribunal in the 2002 presidential campaign, as ruled by

law.

In addition to the Pacheco, Roberto Tovar, Ricardo Toledo, Rodolfo Montero,

Rina Contreras, Rodolfo Montero and Fernán Guardia are being linked to the

investigation.

Guardia was treasurer and Toledo was head of the Pacheco campaign. Toledo

later was appointed Ministro de la Presidencia (Chief of Staff), who quit
the

Pacheco administration last fall and resumed his duties as a Legislative

Deputy.

Investment Risk
Moody's repeated its grade for the risk of investment in Costa Rica,

following a recent evaluation of the country's economy.

The Ba1 rating for Government of Costa Rica bonds, even though not so good -

means there is some degree of speculation in them, was welcomed by

authorities, who feared a lower score, given the delay in the approval of
the

fiscal reform.


*Some 500,000 Jobs Threatened
Close to half a million jobs linked to exports to the United States would be

endangered if Costa Rica, as it is foreseen, delays the approval of the

Central America - U.S. Free Trade Agreement (CAFTA).

Manufacturers are worried about a drop in sales, as compared to the other

nations in the area. Tension has mounted because El Salvador and Honduras

submitted the text to their congresses, but also because they are setting

pressure on their legislators to approve the Agreement immediately.
Nicaragua

has done likewise.

Meanwhile, the Government of Costa Rica has placed conditions on submitting

the text to the Legislative Assembly; it is demanding that Congress first

approve the fiscal reform plan, which is currently entangled.

The U.S. is Costa Rica's major market, the destination of 50 percent of its

agricultural exports and 45 percent of its industrial goods.

The chairman of the Costa Rican Chamber of Industry, Jack Liberman, said
that

241,399 people are employed by firms exporting to the U.S., and that the

related jobs - transport, raw material suppliers, and others - take the

number to at least 500,000.



*For the Better

Amidst the worst corruption crisis, a majority of Costa Ricans believe that

this is for the better, that it is a most valuable opportunity to make a
turn

of helm towards improving the conditions of the country as a whole.

In a Unimer Research survey for the Spanish language daily La Nación, on the

effect of the corruption scandals that have resulted in the jailing of two

ex-Presidents and several other former public officials, 84 percent of those

polled agree that things will improve as a result of the crisis.

While 60 percent of them do not hide that they feel "ashamed" because of the

facts that have come to light, they also believe that the international
image

of the country will not be harmed, because this country has shown that it is

not going to ignore misdoings, no matter who is involved.

Also, a majority believe that all those found guilty will be properly

punished after the proper procedures are followed on the courts.


*Tourism Leads as Dollar Earner

In 2004, tourism confirmed its key role in the economy of Costa Rica.

This sector allowed for several economic and social factors not to be as

negative as they would have been, by counteracting the effects of the

extremely high prices of oil, which according to several analysts and the

Central Bank affected in no less than 1 percent the growth of economy.

Meanwhile, tourism experienced a 16 percent to 20 percent hike from 2003,

with an estimated 1.48 million visitors.

This represents income for us$1.45 billion, as compared to us$1.2 billion in

2003. This also means that while dollars from tourism accounted for 19

percent of the exports in 2003, in 2004 the figure was 20 percent - 8.7

percent of the gross domestic product - almost three times the banana
exports

and more than eight times coffee exports.


*Tico Coffee on Rose Parade

Costa Rican gourmet coffee was exposed to the world in the 116th Rose Parade

in Pasadena, California, on January 1.

This was so because the Starbucks float featured the quality of Tico coffee

and the work of the grower families to offer consumers the best.



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