ICEFI concludes Costa Rica suffering unsustainable fiscal situation

Experts from the Instituto Centroamericano de Estudios Fiscales (ICEFI) presented a report on the effectiveness of tax incentives in Central America and provided strategies on ways to improve tax collection (CB24, 20 October 2016). The ICEFI found current budget projections for Costa Rica in 2017 to be insufficient both medium and long-term and poses a risk to social achievements (CentralAmericaData). Among the issues cited, the study found spending without accurate source funding, insufficient tax collection, public spending adjusted to paying public debt, a need to institutionalize transparency and accountability, and chronic political inability to achieve comprehensive tax agreement amid a persistent fiscal deficit. The fiscal problems in Costa Rica are the result of structural shortcomings, both a lack of income and growing public spending, and requires legal changes.