Costa Rica Announces New Fiscal Measures to Contain Deficit

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    SAN JOSE, COSTA RICA, April 18 (Reuters) – Costa Rican president Laura Chinchilla announced a new set of measures to contain the country’s growing fiscal deficit, after a draft tax reform bill was thrown out by a high court a week ago.

    In a seven-minute address on national television, Chinchilla said her government plans to create an electronic system to better collect sales taxes, eliminate tax exemptions on some luxury products and privatize some state property. She also said reforms bills would be sent to Congress with proposals to freeze the highest government salaries and pensions and reduce funding for political parties, among other actions.

    If all these measures are put into place the government will raise an additional 0.8 percent of gross domestic product (GDP) in taxes, Chinchilla said.

    The initial fiscal reform bill would have raised an additional 1.5 percent in tax revenue but it was declared unconstitutional by a panel of judges on the country’s supreme court on April 10.

    In Wednesday’s speech, Chinchilla did not say whether she would also try to revive this initial bill.

    (Reporting by Isabella Cota; Editing by Lisa Shumaker)

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