Strike in Costa Rica and Its Effect on All of Us

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As the now declared “illegal” strike continues into the 5th week, most of the expat community in the Atenas area has been celebrating that we have not been affected, but we have, and here is how.

First, it is important to explain why this strike is even going on. As we all know, no one likes change and when that change involves taxes, people get upset. Someone will get hurt, someone will benefit. The Costa Rican tax system and debt level has been crippling the economy. Something absolutely has to be done, without question. I am not an accountant, so I cannot tell you how this will affect you directly, but here is a basic overview of some of the changes:

1) Sales taxes will be required on some of the services that before did not have to be paid (in varying amounts, but most at 13%), such as internet, concerts, movies, lawyers, accountants. Other services can be at lesser amounts such as airline tickets which varies for national and international flights, health services (4%), etc. It will not include public transportation, gasoline, education, insurance, Red Cross, firefighting services, and more.

2) Income taxes will be adjusted based on income levels. The lowest level is 0% for anyone who earns under 799,000 colones per month which the government claims is 70% of the population, then as the salaries increase, up to 10%, then 15%, then 20%, and finally 25% for those earning over 4.2 million colones.

3) To improve the level of tax collection and to not allow as much tax evasion, the electronic invoices are already being required by most all businesses so that they have to report income and sales tax. So, this is trying to work on the tax evasion portion from the business side.

4) It takes away future “extra” benefits in government positions which cost the state large amounts. It cannot go back and change current contracts, but will adjust future contracts.

So, these are some of the main points in the new tax plan. This is not all-inclusive, but it gives you a general idea. Now, there are always certain “leaders” who spread false information in order to get people upset and who, therefore, scream in protest.

Yes, in Atenas directly, we have been fairly lucky in that we have not had major blockades and have not run out of many products, but if you think we have not been affected, you are wrong.

1) Most of the public schools have been closed or the majority of classes have been cancelled. These kids are required by law to attend a certain number of hours and how will they replace them? The ninth grade and eleventh grades will have graduation exams and either they will not be prepared or the tests will have to be delayed so they have time to catch up on all of the materials. By law, these exams cannot be cancelled as they can’t graduate or go to the university without them. In addition, for poorer children, the lunches that they receive at the schools are often the only meals they get in a day and those services have been on strike as well.

2) Workers who have to travel to other locations have been blocked or re-routed and have not been able to work. This means that while people who are striking are getting paid, the ones who are in other businesses are losing money because they can’t get to work.

3) Gas and propane gas have been in shortage in many locations. We have had gasoline in Atenas, but what happens if you have to travel to other locations that do not?

4) Tourists got stuck in this. Some had to walk to the airport terminals and I personally had two potential buyers who got stuck in the blockades and decided to go home and forget buying in Costa Rica. Cruise ships were turned away at the borders. When the major news networks are reporting the strikes and blockades in the center of San Jose, would this make you want to make the move to this country?

5) Family court services have been on strike except for emergencies so any changes or attempts to get child support are on hold. Many other court services are also on strike or have now “officially” returned to the office, but don’t answer the phone so they only have to attend clients who go in person.

6) Health services have been limited. Many surgeries have been cancelled, but much depends on the specific doctor.

Maybe you have been one of the lucky ones who has not been directly hit by this, but do not think there haven’t been effects. The Chamber of Commerce of Costa Rica has been reporting a loss of approximately $4.2 million each day. I personally hope for an agreement and a way to move forward for the Costa Rica we love.

Tina Newton is the owner and agent for Tristan & Newton Real Estate, based in Atenas, Costa Rica and has lived in Costa Rica for almost 20 years. She has a Master’s in Economics and is emphatic about sharing information with others who live here and are thinking of moving here. She is the President of the Chamber of Tourism and Commerce in Atenas and Supporting Solutions for Atenas, CR, Inc. and has founded many charitable organizations in the town. She has raised two children and now a grandchild in Costa Rica and she is always willing to answer any questions about moving to Costa Rica or living abroad. You can contact her at tina@tnrealestatecr.com and through her company website at www.tnrealestatecr.com.

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