Community, Economy

Liberia Representatives Seek Approval of Bill that Could Increase City Revenues by Taxing Papagayo

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Liberia representatives have put the need to charge more taxes in Papagayo’s maritime zones back on the table. For them and at least two legislators, the calculation for determining how much these lands should pay is hurting revenues in Liberia and Carillo.

That’s why they signed an accord to request that legislators in Congress approve a bill that the Broad Front Party presented in 2011 and raise the market value of this land. As the value increases, so will the amount of taxes owed by the owners of the land in each municipality.

Liberia needs these funds for public works in the canton,” said council president Juan Flores.

The problem isn’t new. It all started in 2010 when former president Oscar Arias signed a decree changing the base upon which cities and the Costa Rica Tourism Institute charged taxes on properties in the ZMT.

Before 2010, the annual tax was calculated based on the value of land, which was determined by the tax authority. The decree eliminates the requirements for using these values and establishes a base of $1 that is subject to an interest rate that increases each year, but is lower than other properties in Carrillo and Liberia.

It changed the base for calculating the tax, moving it from a system based on the real market value of the properties to a fixed base that doesn’t take into consideration the real value of the properties,” explains the “Bill to recover tax revenues at the Papagayo tourism development”.

From 2011 to 2018, the value per square meter went from $1 to $3.40 due to changes in the interest rate, an increase that representatives and lawmakers in favor of the bill consider insufficient.

The properties in Papagayo are probably the most valuable properties in the country and now what we have is a decree that arbitrarily indexes the base for calculating the tax to three dollars, which is a ridiculous amount,” said Broad Front congressman Jose Maria Villalta.

I think that we should establish more equal prices in the maritime zone,” said Social Christian lawmaker Rodolfo Peña. “For example, in Coco-Ocotal, the price per square meter is around $160-240. In Papagayo it’s $3.40. We need to level out the prices not only in the ZMT, but in the whole area of the property.”

The Senior Vice President of Península Papagayo, Manuel Ardon, believes that the concessionaires already paid enough taxes for their operations. However, he argued that he didn’t know in detail the reform that legislators are supporting.

Million-Dollar Losses

The Broad Front Party and the Congressional Research Center (CEDIL) did a study in 2011 on the impact municipal revenues due to the change in taxes.

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The report states that Carrillo and Liberia missed out on ¢602.7 million ($1.05m) in 2011 and that tax collection in the ZMT fell between 83 and 99 percent, according to cases analyzed with finance ministry estimates.

The City of Liberia did a similar comparison two months ago. But the head of the maritime zone for the city Alvaro Espinoza said he wouldn’t discuss the document because he was on strike.  

Political Pressure

President of Liberia’s City Council Juan Flores said that this month they will meet with lawmakers from Guanacaste in order to get their help with the bill and convince other legislators.

Broad Front Legislator Jose Maria Villalta, who drafted the bill, said that it is in plenary and ready for a vote, but there has been no political will on the part of other parties to put it to vote.

According to the legislator, this bill only requires a simple majority. That means the document would be approved with 50 percent plus one vote in Congress.

Liberian congressman Rodolfo Peña confirmed to this newspaper that his office is drafting a new bill in an effort to increase the amount of taxes owners in Papagayo paid, not only in the maritime zone but in the rest of the development as well.

The project, according to Peña, will also change the composition of the Papagayo board of directors so that it has a member from the towns of Carrillo and Liberia and for sessions to be held in Guanacaste.