Costa Rica: impact of the implementation of VAT on household expenses according to decil of income

Authors

DOI:

https://doi.org/10.15359/eys.24-56.3

Keywords:

Tax reform, value added tax, consumption, Law on Strengthening Public Finance

Abstract

On December 4, 2018, the Legislative Decree No. 9635, entitled Strengthening of Public Finances was published in La Gaceta de Costa Rica; in its title No. 1, it carries out a comprehensive reform of Law No. 6826 (General Sales Tax Law) from November 8, 1982. This reform transforms the General Sales Tax (GST) into a Value Added Tax (VAT), establishing different tax rates for different subgroups of goods and services. The objective of this research is to present the results of the analysis carried out on the impact of the implementation of VAT on the different income deciles in the country (each decile is composed of 10% of households). It is determined that although the highest monetary contribution (tax collection) would be made by the households from the highest deciles, it is the households of the lower deciles that would be most affected in relation to their level of income, since, —according to the National Income and Expenditure Survey of 2013— the first three deciles spend more than they earn. This means that the payment of more taxes will significantly affect their consumption capacity, which will require State support to counteract the effect.

Author Biographies

Fernando Rodríguez Garro, Universidad Nacional, Costa Rica

Economista. Máster en Política económica por la Universidad Nacional (UNA), Costa Rica. Exviceministro de Hacienda, Consultor internacional y académico de la Escuela de Economía de la UNA. Actualmente labora como investigador en el Observatorio Económico y Social (OES-UNA).

Roxana Morales Ramos, Universidad Nacional, Costa Rica

Economista. Máster en Economía de Desarrollo con énfasis en Gestión macroeconómica y políticas públicas por la Universidad Nacional (UNA), Costa Rica. Actualmente labora en la Escuela de Economía de la UNA, como académica y coordinadora del Observatorio Económico y Social (OES-UNA).

References

García, E. (2003). La economía de los impuestos. Madrid, España: Minerva Ediciones.

Instituto Nacional de Estadística y Censos (INEC). (2013). Encuesta nacional de ingresos y gastos de los hogares 2013. Recuperado de http://www.inec.go.cr/sites/default/files/documetos-biblioteca-virtual/meenigh2013.pdf

Ley N.o 9635. Fortalecimiento de las finanzas públicas. La Gaceta, 4 de diciembre de 2018. Alcance N.° 202. Poder legislativo. Imprenta Nacional, San José, Costa Rica. Recuperado de http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=87720&nValor3=114361&param2=1&strTipM=TC&lResultado=2&strSim=simp

Ley N.o 6826. Ley de Impuesto General sobre las Ventas del 8 de noviembre de 1982 y sus reformas. Recuperado de http://www.pgrweb.go.cr/scij/Busqueda/Normativa/Normas/nrm_texto_completo.aspx?param1=NRTC&nValor1=1&nValor2=32526&nValor3=92185&strTipM=TC

Reglamento de la Canasta Básica Tributaria. Decreto ejecutivo N.o 41.615. La Gaceta, 18 de marzo del 2019. Publicado en el Alcance N.o 58 de La Gaceta. Recuperado de https://www.hacienda.go.cr/docs/5c92588b86431_Decreto%2041615MEICH%20Canasta%20basica%202019.pdf

Reglamento de la Ley del Impuesto al Valor Agregado, Decreto Ejecutivo N.° 41779. La Gaceta, 11 de junio de 2019. Alcance N.° 129. Recuperado de https://www.imprentanacional.go.cr/pub/2019/06/11/ALCA129_11_06_2019.pdf

Published

09/09/2019

How to Cite

Costa Rica: impact of the implementation of VAT on household expenses according to decil of income. (2019). Economía Y Sociedad, 24(56), 52-67. https://doi.org/10.15359/eys.24-56.3

Issue

Section

Articles (Arbitrated section)

How to Cite

Costa Rica: impact of the implementation of VAT on household expenses according to decil of income. (2019). Economía Y Sociedad, 24(56), 52-67. https://doi.org/10.15359/eys.24-56.3

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