Costa Rica tax triumph will drive Alvarado’s ambition

Subject

Tax reform.

Significance

President Carlos Alvarado's controversial and long-awaited tax reform passed on December 3. The new measures should help to improve Costa Rica’s fiscal situation, particularly curbing the widening fiscal deficit, and will be welcomed by investors and international institutions.

Impacts

• With the reforms now looking certain, protest fatigue will set in, and union demonstrations will die down.
• The legislature is likely to rally behind Alvarado’s next initiative -- a public infrastructure investment plan.
• The government may try to pass supplementary fiscal reforms in 2019 to support fiscal consolidation.