This Tuesday the Law of Economic Development and Fiscal Sustainability will be debated, vital to generate permanent income to the Treasury
Al least four relevant changes were made in the non-binding report (approved by the Economic Development Commission with six votes in favor and three abstentions) for the first debate of the Law of Economic Development and fiscal sustainability after the covid pandemic. This report will be debated tomorrow, Tuesday, starting at 09:00.
The first change has to do with the personal income tax and the gross income floor from which it will start to be paid a higher tax. Thus, while in the Government’s proposal these gross revenues (which include exempt values such as tenths) were taken into account from $ 2,000 per month, now that floor is $ 2,500 monthly. In the Executive’s bill, this item was calculated from 2.13 basic fractions ($ 2,000 per month) and now it has been placed in the text “2.66 basic fractions”, that is $ 2,500 per month.
Additionally, there is a second change in the global amount of personal expenses, necessary for the tax deduction: eThis goes from 7 to 14 basic baskets. In the original proposal of the Executive it was established that to calculate the deduction of personal expenses, the taxpayer could document having had expenses for up to 7 basic baskets (about $ 5,000). If your income was less than 2.13 fractions, 20% ($ 1,000) of the 7 baskets could be deducted; but if it was higher, then only up to 10% of the seven baskets ($ 500) could be deducted.
The new Commission proposal increases the number of basic baskets to 14 ($ 10,000), but the deduction percentage is cut in half. In the event that the taxpayer’s income is less than 2.66 fractions, 10% of those 14 baskets ($ 1,000) can be deducted; and if it were higher, 5% of the baskets would arrive ($ 500). Despite the change, the possible deduction amount would not change.
Additionally, changes are presented in temporary contributions for both individuals and companies.
The Temporary Contribution to the Heritage of Natural Persons applies to those who January 1, 2021 have individual assets equal to or greater than one million dollars ($ 1,000,000.00) or when there is a conjugal partnership equal to or greater than two million dollars ($ 2,000,000.00). In the first segment that goes from 1 million to 1’199,999.99 they pay 1%, but they do not pay any value per basic fraction.
In the second category are those who have assets from 1,200,000 to 1,499,999. They pay a tax on the basic fraction of $ 2,000 and 1.2% on the excess fraction. Additionally, those who have assets of $ 1,500,000 onwards pay 4 5,600 for the basic fraction and 1.5% for the surplus.
In the Executive’s proposal there were only two segments, one from $ 1 million to $ 1’199,999.99 that paid 1%. And the one from $ 1,200,000 onwards that paid a tax at the fraction of $ 2,000 and a surplus rate of 1.5%. Thus, the change determines a stronger tax on those with assets greater than $ 1.5 million.
Refering to contribution of companies are also raised changes.
A segment of companies that have equity from $ 4 million that will pay 0.4% of that value. Companies with $ 5 million of equity thereafter will pay 0.8%. The original proposal only proposed a contribution of 0.8% for companies with equity of $ 5 million and up.
The assemblywoman Wilma Andrade (ID), Vice President of the Economic Development Commission, He explained that there was a wide debate on the tax proposal, especially in what has to do with permanent income. He explained that the arguments of concern had to do with a possible impact on the middle class. Andrade acknowledged that this new proposal would lower the tax collection, but the final figures will be known in the first debate. In any case, He explained this was the way to achieve consensus within the Commission.
Additionally, Andrade said that there are other proposals and proposals that will go to the plenary session and that may be incorporated after the first debate.
About all the changes Napoleón Santamaría, tax expert, considered that the decisions on the contribution to people with assets greater than 1’000,000 do show more progressive, that is to say, when creating an intermediate segment, greater proportionality is given to the tax. It also highlights that a text has been incorporated so that people should not include the shares of companies in this area. In addition, $ 200,000 can be deducted for the first house or unproductive land.
Regarding the personal income tax, he considers that with the increase in the collection floor, it seems that to benefit an important mass of bureaucrats who earn between $ 1,300 and $ 2,300. It considers that the Government You made a mistake when talking about figures or monthly income. The most important thing was to position the principle of the one who earns more, more pays.
About the last The issue of the payment of the contribution by the companies, considers that there is a lack of proportionality when stating that the companies of $ 1 to 3’999,999 do not pay anything, but those of 4 million pay around $ 16,000, while those of 5 million already pay $ 40,000.
Finally, when asked if the Government will be able to include its fiscal goals after these changes, Santamaría He said no, since the collection would be significantly reduced. In any case, he said that at this stage of the political situation, the approval of the law has become more of a political issue rather than a fiscal one. For the Government it is important to get the Assembly to approve this law.
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