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These stories were published Thursday, Feb. 12, 2004, in Vol. 4, No. 30
Jo Stuart
About us
Tax reform plan would bring $426 million more
By the A.M. Costa Rica staff

Nine Costa Rican legislators are at work five days a week studying what the Pacheco administration has termed its fiscal reform plan.

In fact, the net result of the legislation, if passed, will be to raise nearly $426 million in new tax money. Part of the legislation calls for beefing up the Tributación Directa tax collectors in order to handle this new cash flow.

The big winner, of course, is the government, which is deeply in debt. 

An analysis of the news

Costa Rica is taking exactly the opposite tack as President George Bush of the United States, who determined that only massive tax cuts could spark an economic recovery there.

The question for Costa Rica is: Can the economy afford having another large chuck of cash pulled out of it for use by the government?

Legislators even now are talking about giving up their historic buildings on Avenida Central in favor of a legislative tower to be built on the site of the Zapote carnival grounds.

Tributación Directa, itself, has moved into new digs in western San José.

The Instituto Costarricense de Turismo has a new building. 

Plans for a sprawling convention center west of San José are being drawn up.

In short, there are no signs that the government is trying to control its own spending, not to mention making investments of public money in the recent Luciano Pavarotti concert.  The government has systematically diverted money pledged to road improvement to other purposes over the years.

The big money-making schemes in the government’s tax plan include a value added tax to replace the 13 percent sales tax and taxation of money earned overseas by residents here. The first idea generates a lot of paperwork. They both are hard to enforce.

The tax package would expand existing sales tax to private medical and professional fees and a host of other transactions that are not taxed now. This will generate as much avoidance as it will paper. Nearly everyone who is not on a payroll will have to file a monthly tax report and pay what they owe.

Professionals downtown already report that private discussions are underway to figure out ways around the proposed new tax.

The government seldom expects individual initiative in reducing the personal impact of new taxes. The income from the government’s one-year emergency fiscal plan fell short of estimates for that reason. Some targeted by the new taxes took steps to avoid them legally. Casinos, for example, ducked a new tax on slot 

machines by dumping many of the devices in favor of electronic betting devices.

Individual initiative also raises the question of how good are the government’s estimates. It was Alberto Dent, the minister of Hacienda, who estimated that the fiscal plan would bring in 180 billion colons in new tax money. That’s $142 a year in new taxes from each of an estimated 3 million adult Costa Ricans.

Of course, the $142 per capita cost of the new tax plan would not be shared equally. In fact, the bulk of this money will be paid disproportionately by major businesses, industries and successful professionals, exactly the entities that make the economy hum.

Costa Rica actually would be making more from some businesses then their owners. That is true today with the 13 percent sales tax. Few businesses make 13 percent net income on their gross sales.

An unknown quantity in the new tax plan is the overseas or so-called universal taxation. A Costa Rican with money on deposit with a New York bank will be required to pay taxes on this income. But there are ways around such taxes, including the creation of corporations and entities to filter the money overseas.

A large body of research exists on the impact of universal taxation. The United States has such a tax for its citizens and corporations, which is why major companies have reincorporated offshore and ducked the taxes.

In addition, home grown U.S. firms find they have difficulty competing elsewhere with foreign firms because they are required to pay the additional taxes.

A foe of the government’s tax plan probably would predict economic disaster for the country if the plan were enacted. 

Yet Costa Ricans have a way of accepting those government edicts they like and disregarding those they do not. So it is likely that whatever the assembly passes, the actual implementation will be far different than what is in the law.

The committee of nine has until Feb. 26 to report the measure out to the full assembly.

Pacheco sees an attempt to sabotage tax plan
By the A.M. Costa Rica staff

President Abel Pacheco Wednesday said that the leader of Movimiento Libertario in the Asamblea Nacional was trying to sabotage the proposed tax package.

The president did this while reporting that he would be forced to cut some $170 million from the national budget if the tax plan is not passed quickly.

Pacheco met reporters shortly after Alberto Dent, minister of Hacienda, returned from a session with national legislators who have been asked to pass the measure.

The Ministerio de Obras Públicas y Transporte would take the biggest hit with a $57.5 million cut, Pacheco said. This is the agency that is in charge of the airports and the roads.

The cuts would be about a 3 percent cut based on Pacheco’s $5.7 billion 2004 budget. The budget itself was 10 percent higher than the previous year, but the colon has devalued that much in the same period.

Pacheco Wednesday singled out by name Federico Malavassi, the Libertario leader. The legislator is one of nine national deputies assigned to a committee to study the administration’s proposal. 

Malavassi might be able to prolong the debate and block the measure for a time. Libertarians are philosophically opposed to higher taxes and big government.

But Pacheco stressed that failure to approve the tax package would endanger the country’s social programs and education. Dent said each month the measure languishes will cost $35 million.

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Protest by pirates evolves into a riot by teens
By the A.M. Costa Rica staff

About 100 pirate taxi drivers kicked off a disturbance Wednesday in Tibás, but youngsters in the area quickly took over and kept police battling rioters through the evening.

The taxi drivers who are not licensed began the protest to complain about an agreement between the Ministerio de Obras Públicas y Transporte and the Autoridad Reguladora de los Servicios Públicos. The agreement calls for 600,000 colon fines for persons running taxis illegally. That’s about $1,420. The Autoridad sets the rates for public services. The ministry supervises the tránsitos or transit police.

The agreement also calls for impounding pirate taxi vehicles.

The protest was on the road that connects La Uruca with the Leon XIII section of Tibás north of San José.

Luis Fernandez, the regional director of the Fuerza Pública, said that the teens who joined in the protest were mostly involved in vandalism. The crowd of about 50 mid- to late teens engaged in a standoff with police for hours. The youngsters threw rocks and the police fired teargas shells.

The riot degenerated into attacks on local businesses, and at least one, a restaurant, was robbed during the melees.

Police in riot gear with shields avoided direct confrontations with the bulk of the youngsters. 

During the late afternoon about a dozen persons were arrested. Most of these were taxi drivers.

There were some injures to police from rocks thrown by the crowd. Bystanders were hurt, too.

Police are expected to round up many of the youngsters after tempers cool because most of the rioters were clearly pictured on television footage shot at the scene.

The agreement between the ministry and the rate-setting agency came after licensed cab drivers began a series of rolling protests this week in which they demanded a crackdown on illegal operators.

Licensed taxi drivers in bright red vehicles are distinguished by the yellow triangles with their license number painted on both front doors. The numbers should match the license plate number. Licensed taxis (except those on airport or hotel runs) also carry an electronic meter, a "maria."

Pirate taxi drivers may have vehicles that resemble licensed operators or they may simply be in a passenger vehicle of whatever color.

Obtaining a license is difficult in Costa Rica, and pirate taxis frequently charge less and service areas where drivers of licensed taxi decline to travel.

The licensed drivers paraded their taxis from La Sabana to Casa Presidencial in Zapote Monday and Tuesday, which is why officials acted so quickly to crack down on pirates.

Parmenio prosecution
suffers big setback

By the A.M. Costa Rica staff

The government’s case against a priest and a businessman for the murder of a popular radio commentator received a setback Wednesday.

A man who had been called the government’s star witness changed his story. The man is Jhon Gilberto Gutiérrez. Last Nov. 11 he signed a declaration that said he had been an intermediary who helped set up the slaying.

The government claims that the Rev. Minor de Jesús Calvo Aguilar and businessman Omar Chaves relied on Gutiérrez to find the triggermen.

The victim, Parmenio Medina Pérez, was gunned down by men in an adjacent car in broad daylight not far from his home July 7, 2001. His murder received widespread international exposure in journalistic circles.

The shooting took place near Medina’s house in San Miguel de Santo Domingo de Heredia.

Calvo founded and Chavez supported Radio María, which raised large amounts of money from the Catholic faithful for various causes. Parmenio Medina, who had his own weekly satirical radio show on another station, denounced the religious station for financial irregularities and for the conduct of the priest.

Tuesday Gutiérrez recanted and Wednesday he went on national television from his prison to say he did not know Chaves and only saw Calvo on television. He also said he did not meet with the men in the Hotel Balmoral downtown where the alleged deal took place.

Lawyers for both Calvo and Chaves said they would submit motions to have the preventative detention of their clients reconsidered. 

But Guiselle Rivera, the fiscal or prosecutor in charge of the case, said in a press conference Wednesday afternoon that there still was plenty of evidence to hold Calvo and Chaves.

Meanwhile, Gutiérrez went to court to report he had fired his lawyer and to ask for a public defender.

The arrests Chaves Dec. 26 in the Central Valley and Calvo the next morning in Liberia were initiated by Francisco Dall'Annese, the new fiscal general or chief prosecutor of the country. Both suspects had been questioned at length about the assassination of Parmenio Medina and both have denied involvement. The case is the highest profile criminal case in the country.

Presidents Day break
second to St. Valentine

By the A.M. Costa Rica staff

Today is the birthday of Abraham Lincoln, the 11th U.S. president who steered the Union to victory in the Civil War.

The birthday of George Washington is Sunday, Feb. 22. He was the first president of the United States and commander of the colonial forces during the Revolutionary War.

But the date you really need to remember if you are a man is Saturday, Feb. 14, St. Valentine’s Day. Just like on Groundhog’s Day, Feb. 2, any man who forgets to honor his significant other on Valentine’s Day faces at least six more weeks of winter.

Another date of note is Monday, Feb. 16. This is Presidents Day in the United States, providing many workers with yet another three-day weekend. It is a merge of Lincoln’s and Washington’s birthdays that used to be public holidays.

In keeping with the tradition of respecting both U.S. and Costa Rican holidays, the U.S. Embassy will be closed Monday.

Last two suspects
captured on Nicoya

By the A.M. Costa Rica staff

Two Colombian nationals who fled law officers when their boat came aground in Malpaís Monday have been captured on the Nicoya Peninsula. That brings to five the total of the men who jumped from the boat at the climax of a pursuit by a U.S. Coast Guard helicopter.

The men were on a boat some 60 nautical miles from Costa Rica in the Pacific, and coast guardsmen tried to stop them because they were drug-running suspects. The 40-foot fastboat carried a number of bundles that the men dropped into the sea. Most were recovered.

The men who fled into the Nicoya hills and later were captured are identified by the last names: Moreano Torres and Londoño Bedoya

Murdered driver
found near airport

By the A.M. Costa Rica staff

Police found the body of a murdered taxi driver shortly before 1 p.m. Wednesday when a motorist reported a suspicious vehicle at the mouth of the highway that leads to Alajuela from the Interamerican Highway. The location is not far from Juan Santamaría International Airport.

The Judicial Investigating Organization identified the man as Genaro Alvarado Esquivel, 56. He was a driver for Coope Margarita in Heredia. The man was in the back seat of the cab and had a bullet wound in the back of the head, investigators said.


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Aristide blames the opposition for Haitian violence
By the A.M. Costa Rica wire services

PORT-AU-PRINCE, Haiti — President, Jean Bertrand Aristide says his country's political opposition is responsible for violence now wracking the impoverished Caribbean nation. At least three people died Wednesday in clashes between police and rioters, bringing to 46 the number of people killed since last week, when armed gangs seized several towns in the northwest part of the country. 

Speaking to foreign reporters at Haiti's Presidential Palace, Aristide says the opposition is backing the armed gangs who seized the city of Gonaives and other nearby towns over the past week. "Unfortunately what is happening in Gonaives is unacceptable. An opposition, using terrorist actions, through thugs, to keep hostage about 153,000 people," he says. "This is not acceptable."

Police say they are making progress clearing armed gangs from towns near Gonaives, Haiti's fourth largest city, which is about 100 kms. or 60 miles north of here. However sporadic violence continues in the town of St. Marc, 70 kms. (42 miles) north of the capital, where police claimed to have routed armed gangs on Monday.

Haiti's second largest city Cap Haitian is without power and there are reported clashes between police and government supporters against anti-government protesters. Aristide says despite 

the violence he hopes to end the crisis through negotiation. He says police have been cautioned to move slowly to avoid any unnecessary violence.

"When I say we prefer to go slowly, it is to say we will be willing to go fast and make mistakes," says Aristide.

Members of a broad coalition of opposition business leaders, politicians and representatives of civil society groups, have criticized the violence now underway in Gonaives and elsewhere in Haiti. Opposition leaders say some of the armed gangs now controlling Gonaives are former Aristide allies who have turned on their former patron.

Haiti's current political crisis dates to legislative elections in 2000 which international observers called flawed. Since then the opposition and the government have been unable to agree on new legislative elections, leading to political paralysis.

Haiti's opposition charges that Aristide's government is guilty of human rights abuses, corruption and mismanagement, and have done nothing to alleviate Haiti's extreme poverty, charges Aristide and his supporters strongly refute. 

Opposition leaders have called on Aristide to step down, but on Wednesday Haiti's President repeated that he has no intention of leaving office before his term expires in February 2006. 

Colombia's Uribe faces protest at EU Parliament
By the A.M. Costa Rica wire services

BOGOTA, Colombia — President Alvaro Uribe has defended his country's anti-terrorism laws before the European Parliament where a number of lawmakers staged a protest against the policies.

Uribe addressed the Parliament in Strasbourg, France, Tuesday, while several European lawmakers wore white scarves printed with the words, "Peace and Justice in Colombia." Some of them walked out of the room during his speech.

Uribe responded by saying human rights issues should not be used to excuse terrorist acts. He also said Colombia will not negotiate an exchange of prisoners with the country's largest rebel group, the Revolutionary Armed Forces of Colombia. 

Rebels are responsible for dozens of kidnappings 

in Colombia, including that of former presidential candidate Ingrid Betancourt.

Uribe also said Colombia needs more cooperation to crack down on illegal drug production. Colombia is responsible for most of the world's production of cocaine, with profits funneled into rebel activity. 

Meanwhile, Colombian authorities say they have captured two guerrillas suspected of involvement in Ms. Betancourt's kidnapping. Police say Carlos Augusto Hurtado and Natividad Villan were captured during a roundup of suspected rebels in Caqueta state on Jan. 4.

Ms. Betancourt was seized on Feb. 23, 2002, as she drove into one of Colombia's most active rebel zones. The guerrillas have said she is on a list of hostages they would be willing to swap in exchange for rebel fighters now in jail.

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U.S. discounts terrorist threat from tri-border area
Special to A.M. Costa Rica

WASHINGTON, D.C. — The U.S. State Department says it has no credible information confirming an established presence of the al-Qaida terrorist organization in the area where the borders of Paraguay, Brazil, and Argentina meet.

The State Department also said it has not uncovered information that would confirm ongoing terrorist operational planning in this region, known as the tri-border area.

Terrorist supporters in the tri-border area are primarily engaged in fundraising for the Middle East terrorist groups Hezbollah and Hamas, said the State Department, adding that the United States has worked "actively and cooperatively" with governments in the region to disrupt this fundraising activity. 

The State Department cited several "counterterrorism advances" that have occurred in Latin America since the first half of 2003, in the form of legal proceedings filed against several terrorist figures involved in tax evasion and illegal possession of firearms and explosives.

The tri-border region has long been of interest to the United States, said the State Department, and "we have undertaken initiatives both bilaterally and multilaterally to understand the true nature of the threat [of criminal and terrorist activity] and to design the most appropriate counterterrorist measures."

The United States, working with the three tri-border countries, has launched the "3+1" Counterterrorism Dialogue that is focused on terrorism prevention, counterterrorism policy 

discussion, increased cross-border cooperation, and mutual counterterrorism capacity-building, the State Department said. The participating countries, said the department, have met three times, most recently in Asuncion, Paraguay, in December 2003.  They are committed to strengthening cooperation among their financial intelligence units, border security officials, counterterrorism case prosecutors, and police investigators, the department said.

The United States has contributed $1 million specifically for building on the success of the 3+1 Dialogue, said the State Department.

The State Department also said it did not possess information that would lend substance to reports of a joint al-Qaida/Hezbollah plan in late 1999 to attack Jewish targets in Ciudad del Este, Paraguay; in Buenos Aires, Argentina; and in Ottawa, Canada.

In remarks Jan. 29, Cofer Black, the State Department's coordinator for counterterrorism, said that while the United States and its Western Hemisphere partners are cooperating to combat terrorism, more must be done "to ensure our hemisphere develops a well-coordinated and comprehensive counterterrorism strategy."

He encouraged hemispheric nations that have not done so to ratify the Inter-American Convention Against Terrorism, a dozen United Nations protocols on terrorism, and other related instruments.

"We can prevent and disrupt terrorist activity by working together to secure our borders, strengthen customs enforcement, and develop strong legal and financial regulatory systems to criminalize terrorism and terrorism finance," Black said.

Brazilians favor fingerprinting and photographing Americans
By the A.M. Costa Rica wire services

RIO DE JANEIRO, Brazil — New poll results suggest that nearly three quarters of Brazilians favor the photographing and fingerprinting of Americans entering the country.

The figures released by the Sensus Institute Tuesday show 74 percent favor Brazil's new requirement while only 12 percent oppose it. 

But only 3 percent of the 2,000 people surveyed 

said the policy should be extended to citizens of all nations. 

Brazil's new policy is a response to a recently adopted U.S. policy that requires visitors from most other nations to be photographed and fingerprinted upon entering the United States. 

Some Americans have reacted with displeasure to Brazil's new policy. At least two U.S. citizens have been fined and sent home after making obscene gestures while having their picture taken. 

Scandal-plagued Toledo must shuffle his cabinet again in Peru
By the A.M. Costa Rica wire services

LIMA, Peru — President Alejandro Toledo is once again reshuffling his cabinet in an effort to diffuse a scandal which has driven his approval rating to around 7 percent.

A spokesman for the president says he hopes to build a new cabinet that has support from a broad cross section of Peru. Toledo is expected to unveil the new cabinet next week.

President Toledo's government has been plagued

by scandal in recent months. The latest turmoil involves allegations that former presidential lawyer Cesar Almeyda met several times with retired Gen. Oscar Villanueva to discuss bribing judges. Villanueva was wanted on corruption charges and later committed suicide.

Media reports based on undisclosed audio tapes, said the men discussed ways to ensure that Villanueva would receive lenient treatment in exchange for providing information on the corruption scandal that brought down former president Alberto Fujimori. 

Jo Stuart
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