Comments
1. Labor Costs: yes, they are lower here than many places... as an unskilled laborer, it is really difficult to to survive; as a skilled laborer –professional-- you can survive but unless you work for yourself or for the government, you cannot thrive..
2. Onions: this is BS... less than two months ago, an article appeared talking about the effects of drought on the price of onions...the price had doubled...now we bet this... what BS!
3. Caja and long quays: who to believe? the government or the labor unions...I don't believe either and figure the correct answer is somewhere in the middle.
4. CR Competitiveness: the inclusion of the following statement calls into question (for me) the rest of the article: The country received a score of 6.2 out of 7 in health and primary education, which placed it near global leader Finland, which scored 6.8. Certainly the country suffers from poor infrastructure and government bureaucracy / inefficiency
1. Report singles out low Latin income tax rates
Special to A.M. Costa Rica
Taxes on the salaries of the average worker in Latin American and Caribbean countries totaled 21.7 percent of total labor costs in 2013, one-third lower than in First World countries, where the average was 35.9 percent, according to the first edition of “Taxing Wages in Latin America and the Caribbean.” More than 90 percent of the difference between Latin America and countries in the Organisation for Economic Co-operation and Development is due to personal income tax, which is 13 percent of total labor costs, according to the report.
The report, covering 20 Latin American and Caribbean countries, was produced jointly by the Inter-American Centre of Tax Administrations, the Inter-American Development Bank, the Development Centre and the Centre for Tax and Policy Administration, both of the Organisation for Economic Co-operation and Development. The report was made public Tuesday in Buenos Aires during a forum hosted by Argentina’s ministry of treasury and public finances.
The tax amount for the average one-earner married couple with two children in Latin American and Caribbean countries was 21.4 percent, only 0.3 percentage points less than that of the single worker, according to the report. The corresponding difference in Organisation for Economic Co-operation and Development countries, where working family benefits are substantially higher, was 9.5 percentage points.
The so-called tax wedge measures the difference between an employer’s labor costs and an employee’s corresponding net take-home pay. It reflects very low average personal income tax rates. In fact, Mexico was the only country included in the report where workers had to pay income tax at the average wage level.
In comparison, income tax represented 13.3 percent of the labor costs of an average worker in Organisation countries. The prevalence of informal labor markets and tax evasion contribute to the low levels of income tax revenues in Latin American and Caribbean countries.
2. Government moves to support the price of onions
By the A.M. Costa Rica staff
The government says it will purchase 90,000 kilos of onions from small producers to support the prices.
Onions have taken a seasonal dive with retail prices at farm markets around 450 colons (about 83 U.S. cents) a kilo. The price is expected to drop even more.
The government will be paying 750 colons (about $1.38) a kilo under the plan announced Tuesday. Prices earlier this year were about double that.
President Luis Guillermo Solís met with producers and the Corporación Hortícola Nacional in Cartago Tuesday. The Consejo Nacional de Producción will buy the onions. The Ministerio de Agricultura y Ganadería supports the plan.
The government also said that it would work to establish an onion drying facility north of Cartago Centro.
Producers also are planning to create a special seal or trademark to put on onions to show that they are from Costa Rica. Foreign imports, although costing about 800 colons a kilo here, have been affecting the local market. In fact, the Corporación Hortícola Nacional has come out in opposition to Costa Rica joining the Pacific Alliance trade pact.
Although a lot of the country’s onions are grown in the Cartago area, production does not seem to have been affected much by the eruptions of the Turrialba volcano. Other types of agriculture have.
These will cost a bit more now.
The Corporación Hortícola Nacional was created by the legislature 20 years ago and took over the functions of the then-potato promotion organization. The corporation benefits from a tax on cement and a line in the government’s budget, as well as money from producers.
The government also said Tuesday that onion producers will benefit from a promotional campaign set up with money from the Banca para el Desarrollo through the corporation.
Onions are a staple in most Costa Rican homes. Surveys have show that nearly every home has a supply of onions.
Santa Ana is generally considered the national onion capital, and that area has several promotional activities, including fairs, each year.
The Consejo Nacional de Producción will warehouse the onion purchases and try to sell quantities when the price improves.
The government agency also controls the price of white corn, beans and rice and restricts imports to maintain established levels of prices for the products.
3. Caja unions say 600,000 are on medical waiting lists
By the A.M. Costa Rica staff
Two unions of employees who work in the nation’s public health agency said Tuesday that there are 600,000 patients on various types of waiting lists and that workers face threats in order to keep the situation secret.
The two unions also said that administrators of the Caja Costarricense de Seguro Social are hiding the real figures.
The unions are the Bloque Unitario Sindical y Social Costarricense and the Unión Nacional de Empleados de la Caja y la Seguridad Social.
A statement said that representatives would meet with President Luis Guillermo Solís today to present proposals for reducing the lengthy waiting lists.
The statement said that the lists range from those awaiting surgery to those awaiting appointments with specialists to those needing diagnostic work such as mammograms and biopsies.
The unions said there are medical centers where Caja affiliates have been waiting four years to see a specialist. The Caja operates all the public hospitals and the many local clinics. The Caja has had chronic financial problems.
The unions, particularly the Unión Nacional de Empleados, has been vigorous in bringing Caja problems to the public. The union even stages short strikes periodically.
Expats are affected because foreigners with legal residency are required to affiliate with the Caja and pay monthly fees. Many, however, prefer to use private medical services for some of the reasons raised by the unions.
The Caja is a point of pride with Costa Ricans who note the public medical service now is 75 years old. But there is a small movement to privatize the institution.
The unions aired their concerns, in part, because the government has a special, high-level group that discusses health issues at Casa Presidencial.
The unions cited the case last year of Sofía Bogantes, a cardiologist at Hospital México, who was reassigned briefly after she went public and said that 141 Costa Ricans died because they were among the 800 persons on a wait list to receive a catheter procedure. The hospital handles many of the country’s heart cases. The union said she had been persecuted psychologically and at the workplace.
The unions said they had short- and long-term plans to solve the problem.
The Caja is known for its long lines. Those using the system wake up early and show up before 6 a.m. in order to get a slip that allows them to stand in line to make an appointment. Sometimes those seriously ill are turned away because the appointment times have been exhausted. The institution is making an effort to do much of that electronically now.
Costa Rica ranked 54th out of 138 countries evaluated in the World Economic Forum’s latest Global Competitiveness Report released this week.
4. Costa Rica drops two spots in global competitiveness ranking
The country ranked fourth in Latin America this year and second in Central America behind Panama.
The World Economic Forum ranked Chile the most competitive country in the region, followed by Panama and Mexico. Paraguay, Bolivia and Venezuela ranked at the bottom of the Latin American countries.
The report notes that Costa Rica’s slight decline in ranking is mainly due to its scores in three areas: institutions, market efficiency for goods and innovation. In each of these pillars the country dropped 11 spots compared to last year’s report.
Costa Rica also dropped in the ranking in terms of business sophistication.
In terms of macroeconomic environment, Costa Rica rose 12 spots in the ranking, from 94 to 82, event though it got weak scores for the country’s rising debt and fiscal deficit.
The country also ranked low on infrastructure, mostly because of its public roads, ports and air transport infrastructure.
The report noted that the most problematic factors for doing business in Costa Rica are inefficient government bureaucracy, inadequate infrastructure, high tax rates and minimal access to financing.
The World Economic Forum calculates its index by collecting figures from the World Bank, United Nations, World Health Organization and International Telecommunication Union on 107 variables grouped into 12 categories.
The Costa Rica-based Central American Institute of Business Administration also provides information about Costa Rica and other countries in the region.
Where Costa Rica improved
Despite its drop in the global ranking, Costa Rica leads Latin American countries in the categories of innovation and business sophistication. It also leads the region in terms of health and primary education.
The country received a score of 6.2 out of 7 in health and primary education, which placed it near global leader Finland, which scored 6.8.
Costa Rica has a life expectancy of nearly 80 years, one of the highest in the report. Costa Rica also has few cases of diseases like malaria and AIDS, which negatively impacted public health indicators for many poor economies, the report noted.
The country’s scores for its elementary, high school and college education systems were among the top 35 in the world.
Business leaders agree
In response to Costa Rica’s ranking in this year’s Global Competitiveness Report, local business leaders demanded improvements from the government, mainly in public infrastructure and in cutting red tape.
Francisco Gamboa, executive director of the Costa Rican Chamber of Industries, said Costa Rica’s decline in the ranking wasn’t surprising.
“We will not improve our position in the competitiveness ranking until we improve our roads, finish the Moín cargo terminal and declare war on excessive red tape,” he said.
Yolanda Fernández, president of the Costa Rica Chamber of Commerce, said in a public statement that the World Economic Forum report reflects the country’s reality. She said private-sector entrepreneurs face daily problems with excessive bureaucracy.
She also said that the country’s precarious infrastructure is always a major problem. As an example, Fernández criticized the excessive time cargo trucks spend transporting merchandise every day because of constant traffic jams.
Economy Minister Welmer Ramos said the administration of President Luis Guillermo Solís has passed legal reforms to promote competitiveness and is currently promoting changes in legal procedures to speed up the process to open new businesses.
Ramos said the country’s drop in the World Economic Forum report does not necessarily mean its competitiveness has deteriorated. “It can also means that other countries are improving,” he said.
