State Tax on the Basic Food Products for Costa Ricans come into Effect

Costa Ricans will pay more for their basic food products starting this past Wednesday, in the face of unsuccessful efforts by the Government and the Legislative deputies to postpone the entry into force of that tax.

As of July 1, 2019, a long list of items and services, previously exonerated, have a Value Added Tax (IVA in spanish) of 13 percent, while the validity of one additional percent of that tax had been deferred.

This IVA is part of the Public Finance Strengthening Law (Plan Combo Fiscal) approved in December 2018 by the Legislative Assembly, despite more than 90 days of a general strike, the longest union protest in the history of Costa Rica.

Thus, from this day on, Costa Rican consumers will pay more for bread, sugar, coffee, rice, beans, eggs, meats and a long list of other essential products, because neither the Government nor the legislators were able to approve the expected postponement for another year its entry into force.

So, in addition to the strong economic impact, with thousands of workers fired or laid off, caused by the COVID-19 Pandemic, now Costa Ricans will also have to face the increase in prices for their basic living necessities, causing an additional strain on the livelihood of most families in the country.

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