Legislative Assembly Fast Tracks Law Project Seeking Moratorium on Value Added Tax for the Basic Food List and House Rentals

The project “Law of Moratorium on the Value Added Tax for the Basic Food List, Home Rentals and Public Services” will be voted soon in the first and second debate, after 35 legislative deputies gave their support so that the motion is exempted from excessive procedures.

The initiative promoted by the deputy of “Nueva Repùblica” political party, Harllan Hoepelman, has a single article, where the 12-month moratorium is decreed for the entry into effect of the Value Added Tax (IVA in Spanish), contemplated in the Law for Strengthening the Public Finances, for the house rentals and the basic food list.

“Now more than ever with the economic situation caused by the Pandemic, it is necessary to take care of the citizens with the lowest income. Creating an environment of trust in Costa Rican commerce and real estate to boost the economy,” said Hoepelman.

The motion had the support of the different factions in the Legislative Plenary. Only seven deputies from the Citizen Action Party (PAC) voted against the proposal. “I am surprised by the double discourse of the PAC government, when voting against this measure, they declare in the media that they want to postpone the tax on the list of the basic food (Cesta Bàsica), but today they voted against it. We must ask the government to be consistent with what they say and what they do,” stressed the Nueva Repùblica deputy. Hoepelman added that “once again we see who are the deputies who are defending the citizens who are most in need.”

Foods Products that are now charged with the IVA

Starting this past Wednesday, July 1st, products from the list of the basic food (Cesta Bàsica) increased in price by being taxed with the 1% IVA. Among them, bread and tortillas, rice and cereals, dairy products, meats and sausages, fruits and vegetables, as well as coffee, cocoa, horchata, sugar, honey, syrups, and sweet tapas.

Toilet paper, toothbrushes, toothpaste, brooms, and matches were also added to the 1%, money that according to the plan would be directed by the government to non-contributory pensions.

The population will also have to pay an increase in tourist services, since included in these fiscal measures, as of July 1st, a 4% IVA began being charged on them. This same percentage must be paid for construction projects submitted after September 30th, 2019, before the Federated College of Engineers and Architects (CFIA).

In addition to this Law project, another Law proposal on relief to the construction sector due to the national emergency by COVID-19 was also fast-tracked with the aim of economic recovery after the health emergency passes.

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