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These stories were published Wednesday, April 10, 2002, in Vol. 2, No. 70
Jo Stuart
About us
A.M. Costa Rica photo
The group
of four

The Costa Rican music group Entrellas holds forth at the Plaza de la Cultura last night as part of the 8th International Festival of the Arts in San José.

Singers are María Prétiz, Sylvie Durán, Miriam Jarquín and Patricia

A different group will be there each night, and spectators start gathering by midafternoon to grab one of the bleacher seats.

New laws will provide the details
New tax plan could have dramatic impact here
By Jay Brodell
editor of A.M. Costa Rica

Amid the hoopla of the presidential runoff elections a group of former ministers released a report to the president that could have far-reaching impact on Costa Rica.

The report was very general, and its release left many foreigners shaking their heads and waiting for more information.

The report is complex. And an article Monday outlined the basic proposal. The whole idea is 

Analysis on the news


to generate more money for the government to avoid an Argentina-like default. The Costa Rican government is heavily in debt.

Of major interest to foreigners was a proposal to tax foreign income and to create a valued added tax that would be far broader than the current 13 percent sales tax.

Foreigners are wondering if their pensions and income from sources outside Costa Rica will be taxed here. And they are wondering how this new value added tax will be applied.

Ryan Piercy, executive director of the Association of Residents of Costa Rica has his experience as a Canadian citizen to weight the valued-added tax. Canada has a similar taxation scheme. Piercy wonders if the value-added tax would be in addition to the existing sales tax or a replacement for the current tax. He said that Canada charges a sales tax AND a value-added tax.

The value-added tax would impose taxation on transactions that are not now taxed, including professional services and, perhaps, interest income on investments.

Of course there is no answer to Piercy’s question because the legislation that would put new taxes into effect has not yet been drafted.

Opinions among foreign residents and Costa Ricans are mixed. A waiter at a popular downtown restaurant said that a value-added tax was a good idea because other developed countries have such a tax. However, the United States does not.

Many businessmen seem to support the tax, too, because they recognize that Costa Rica desperately needs the money.

Others believe that any new taxes could drive foreign funds further offshore. A local 

financial planner said he believed that rich Costa Ricans already have 95 percent of their money in other countries where they are safe from Tico taxation. In addition, taxing the 
income of foreigners could reduce valuable foreign hard currency income here, he said.

Despite the offshore trend, Costa Rica, under the plan proposed by the former ministers, will make tax treaties with other countries, and the taxman here will be able to exchange vast amounts of international income data to catch deadbeats.

Costa Rica already belongs to international organizations that fight against tax havens for the wealthy.

The extent of a value-added taxes also is not known. Will it be imposed on food? If so, look for major reactions from usually placid Ticos.

And who pays the tax, anyway. Of course, the taxpayers, no matter how the new proposals are levied, are the Costa Rican people and anyone who happens to live here. The ministers' report did suggest providing some deductions for taxes already paid elsewhere.

A value-added tax is one that is levied at each stage in the life of manufactured goods. The farmer sells the corn to a producer who grinds it. The tax is applied when the ground corn is sold to a tortilla factory. The tortilla factory pays a tax on the difference in value between the ground corn and the tortillas. The wholesaler collects a tax as he delivers the tortillas to a retailer. The retailer collects a tax when the final sale is made to the person who will eat the tortillas.

Nevertheless, the final price the consumer pays for the tortillas must be high enough to provide a fair profit plus pay all the accumulated taxes.

In the case of professional fees, the tax will be more like a straight sales tax. A lawyer or accountant will simply assess taxes on services.

The report by the former ministers was bipartisan. Abel Pacheco, the president-elect, probably would be able to get many of the changes passed in the National Assembly. He is likely to favor much of the report because the study was made at the request of Miguel Angel Rodríguez, the current president who is a member of the same political party.

The report also points out exactly how fragile Costa Rica’s debt situation is. The country is paying about 25 percent of its national budget as interest to internal and foreign creditors. A slight upward change in interest rates, which is inevitable, could trigger serious repercussions.

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Emergency funds due beleaguered coffee growers
Special to A.M. Costa Rica

WASHINGTON, D.C. — The U.S. Agency for International Development  will launch a new $6 million special coffee program to help coffee growers in Central America recover from a crisis that is said to have led directly and indirectly to a loss of some 600,000 jobs in the region.

The new program was announced during conference last week in Antigua, Guatemala, to discuss the coffee crisis in Central America. USAID officials said the overall strategy of the two-year program, to be launched in fiscal year 2002, is to promote rural prosperity emphasizing high-quality coffees as a response to the region's social and environmental challenges.

USAID's George Carner, who spoke at the conference, said the program will provide technical assistance and promote commercial alliances in each Central American country to strengthen quality management, marketing, certification, and policies to promote an adequate, sustainable, and profitable supply of specialty and alternative coffees from Central America and the Dominican Republic. USAID will work with the Inter-American Development Bank and the World Bank on the $6 million plan, said Carner, who is USAID's program director in Guatemala and Central America.

He noted that the program would be part of the agency's new multi-year initiative called the Opportunity Alliance, which seeks to build trade capacity, diversify agriculture, and reduce vulnerability to disasters and environmental degradation in Central America and Mexico.

Carner said a key objective of the Opportunity Alliance is to promote rural prosperity and competitiveness through diversification to higher-value products, business development, more productive technology, niche marketing, and legal, regulatory, and policy reform to both help reduce poverty and better link the rural sector to local and export markets.

In his remarks to the conference, Carner said that "there is little doubt that the international coffee 

market is undergoing a major structural change in supply, due to oversupply of low-quality coffee." More consumers, he said, "are willing to pay top 
dollar for a quality cup of coffee," adding: "This structural shift requires major adjustments in coffee production and marketing. We can either manage these adjustments or suffer the consequences of a forced adjustment. I believe we should manage this competitive transition."
Crisis to be here awhile

Special to A.M. Costa Rica

A recent USAID fact sheet said that Central America's coffee crisis is not a short-term problem, since it is estimated that it could take up to five years for coffee prices to recover to previous levels. 

USAID also warned that many families in the region have lost a major source of their livelihoods as a result of low coffee prices and might go hungry unless steps are taken to help them deal with this problem on a short- and longer-term basis. 

Central Americans, Carner said, have been increasing their quality coffee exports for years and are in a "good position to sustain and increase their competitive position in the global quality coffee market, taking more advantage of the market demand for high-quality coffee."

The World Bank's Martin Raine described the drop of international coffee prices to their lowest level in 100 years as "an economic and social disaster that has cost Central America, directly or indirectly, some 600,000 jobs." 

Robert Kaplan of the International Development Bank observed that "structural changes in the coffee sector, both on the supply and demand sides, have created a need for new answers that restore viability by strengthening the comparative advantage of countries and of each producer."

Abduction suspect identified as Colorado woman
Barbara Vigil
Diane McCallian
by the A.M. Costa Rica staff

The woman detained in Heredia Monday afternoon to face extradition to the United States on a child abduction charge is Barbara Vigil, 33, the U.S. Embassy said Tuesday.

She is described as a non-custodial parent who took her child Diane McCallian, then 4, from Arapahoe County, Colorado, last April 15. A felony warrant for parental kidnapping was issued three weeks later on May 9, according to The Polly Klaas Foundation, which works closely with police. An embassy spokesman declined to identify the woman Monday.

Venezuelans workers
continue their strike

By the A.M. Costa Rica wire services

CARACAS, Venezuela — Businesses throughout Venezuela closed down after the Venezuelan Workers Confederation, the CTV, and Fedecamaras, Venezuela's largest business federation, held a general strike in support of the state-owned oil company, Petroleos de Venezuela. The oil company's management is in dispute with the government over appointments to the board of directors. 

The striking oil workers and anti-government labor unions have extended their job action through Thursday. 

Venezuelan President Hugo Chavez said in a speech late Tuesday that the leaders of the strike are corrupt. He also said the strike is a conspiracy to push him out of office. 

This is the second time in less than six months that Chavez has faced the combined might of business and the labor unions. Last December, Fedecamaras, with the help of the unions, staged a one-day work stoppage in protest over a package of laws. 

Some 70 percent of businesses in the normally bustling downtown area were closed. 

While public transport functioned normally, passengers were scarce. Reports from towns and cities elsewhere in the country painted a similar picture. 

Labor and business leaders declared the strike a success, despite the government's efforts to downplay the event. The nation's TV and radio stations could not independently report the strike for much of the day because Chavez used his power to oblige them to broadcast government transmissions giving his side of the story. 

The shutdown has oil markets on alert. Within days, oil analysts say, both domestic energy supplies and exports — which supply Venezuela with 80 percent of its foreign earnings and half of government revenues — are likely to dry up. The government, however, shows no sign of backing down. 

On his Sunday radio and TV program, Chavez announced the dismissal of seven senior executives from the oil company and said he was prepared to dismiss the entire management if necessary. Describing the rebels as a privileged elite who had been running the industry as a private fiefdom, he declared his intention of opening up what he called the "black box" of Petroleos de Venezuela. With the largest oil reserves outside the Middle East, this country is a major supplier to the U.S. market of both crude oil and oil products. 

The wholly-owned Petroleos de Venezuela subsidiary Citgo operates over 13,000 gas stations in the United States. In recent days, the international oil market, already jittery over events in the Middle East, has also been looking with some concern at the situation in Venezuela. But as yet no solution to the crisis is in sight.

Venezuela belongs to OPEC and is the world's number-four oil exporter, pumping more than 2.4 million barrels of crude oil each day. 

President Bush said Tuesday that increasing oil prices could hurt the U.S. economy and that he will consider all options to counter such a development. He said those options include drilling in an Alaskan nature refuge, tapping the U.S. strategic petroleum reserve, or reducing gasoline taxes. Environmentalists oppose drilling in the Alaskan refuge, saying it would endanger wildlife in the area.

Aleman rejects
corruption charges

By the A.M. Costa Rica wire services

MANAGUA, Nicaragua — Former Nicaraguan President Arnoldo Aleman has denounced corruption charges against him, describing them as an attempt to destabilize the country. 

The former president, who now heads the National Assembly, and seven former aides, have been charged with diverting more than $1.3 million in government money. 

The former president has denied any wrongdoing during his term in office from 1997 until January. Aleman also told the Nicaraguan media he will not relinquish his immunity from prosecution. 

Authorities say the investigation centers on a contract that would have allowed a Managua television station, Channel Six, to broadcast programs from Mexico's TV Azteca in Nicaragua. 

Investigators say the deal was signed without a bidding process and the money Channel Six was to have paid for the programming was diverted to personal accounts. 

The case follows current President Enrique Bolanos' promise to crack down on corruption. He took office in January, succeeding Aleman.

Aleman's spokesman, Roberto Duarte, and two others, were arrested in March and jailed in connection with the scandal. Mexico's former ambassador to Nicaragua, Ricardo Galan, also was implicated, but reports say he has left Nicaragua and his whereabouts are unknown. 

Jimmy Carter plans
to travel to Cuba

By the A.M. Costa Rica wire services

Former President Jimmy Carter has received U.S. government permission to travel to Cuba next month. The trip will make Carter the first current or former U.S. president to visit the Communist-ruled island since its 1959 revolution. 

The former president's foundation, the Carter Center, Tuesday said the U.S. Treasury Department granted him a license to travel to the island. The Atlanta-based Carter Center says the exact dates have not been confirmed. 

Carter needed the license because a 40-year-old travel and trade embargo bans U.S. citizens from spending money in Cuba, effectively banning their travel there. 

Carter has been a critic of U.S. sanctions and has called for trade with the island. The United States and Cuba do not have formal diplomatic relations. Observers say Carter's trip could bolster efforts by some U.S. lawmakers to ease U.S. sanctions against the island. Many Cuban-Americans, however, oppose any lifting of the embargo against President Castro's government. 

President Bush, who enjoys strong support among Cuban-Americans, pledges to strengthen the embargo against the government in Havana. A White House spokesman said the administration would like Carter to push for democratic reforms if he travels to Cuba. Cuban President Fidel Castro invited Carter to the island, saying the former president was welcome to visit and offer all the criticism he wants. 




Legend María Felix 
dies on her birthday

By the A.M. Costa Rica wire services

MEXICO CITY, Mexico — One of Latin America's most popular film stars has died.. María Felix (born María de los Angeles Guereña), known throughout the Spanish-speaking world and in many European
nations for her 47 film roles, died in her sleep Monday, her 88th birthday. News of her death has caused great tumult and sadness in the Mexican capital. 

Hundreds of people gathered outside her home in the fashionable Polanco neighborhood of Mexico City after local news media interrupted their programs to announce her death. 

Although she had not made a film since 1970, María Felix remained an important cultural figure in Mexico, remembered by many for the song she inspired. 

The Maríachi favorite "María Bonita" was written by famed Mexican composer Agustin Lara when he was married to María Felix. He was one of at least four husbands she had during her film career that began in 1941. That period, the 1940's and 1950's, is still known as the Golden Age of Mexican cinema. Mexican films of that time were popular throughout Latin America. 

Among the pictures for which María Felix is best remembered are "La Generala," "Rio Escondido," and "Doña Barbara." The latter film, based on a novel by Venezuelan author Romulo Gallegos, provided the actress with a nickname, La Doña, that followed her through the rest of her years. 

Although her beauty faded, her tough personality remained and even political figures at times felt the sharp tongue of "La Doña." Last year, for example, she criticized President Vicente Fox for spending too much time "on his knees," as she put it, trying to accommodate Zapatista rebel leader Subcommander Marcos, whom she referred to as a clown. 

Some of her Mexican co-stars from the Golden years, like Pedro Armendariz and Dolores Del Rio, went on to achieve success in Hollywood films as well. But María Felix remained in Latin America, except for a few films she made in France and Italy. In later years she lived in a house in France as well as at her home in Mexico. 

In one of her last dramatic appearances, on Mexico's Televisa television network, María Felix recited a poem that might have served as her epitaph. She spoke of how her movie roles had given her a certain immortality, in that they have been seen and will be seen by generations of Mexicans, past, present and future. On Monday, the final curtain closed on María Felix, but the crowds gathered in mourning here in Mexico have confirmed her continuing status as a cinematic legend. 

Queen Mother
is laid to rest

By the A.M. Costa Rica wire services

LONDON, England — The body of Britain's late Queen Mother has been laid to rest at Windsor Castle after a funeral marked by the country's traditional pageantry. 

Following a private religious ceremony in St. George's Chapel the remains were placed in a vault next to those of her late husband King George VI, who died 50 years ago. The ashes of their daughter, Princess Margaret, who died just under two months ago were also transferred to the same vault.  The Queen Mother died March 30 at 101. 

Earlier, a million people turned out to pay final respects to the Queen Mother on her final journey from Westminster Abbey along the road to her final resting place at Windsor. 

Military units and bands escorted the Queen Mother's coffin into the abbey where the Archbishop of Canterbury, George Carey, the spiritual head of the Church of England, described her as deeply loved and greatly missed. He said Britain continues to honor and celebrate her gifts of strength, dignity and laughter. 

Royalty from some 25 countries, including the monarchs of Spain, Sweden, Denmark and the Netherlands joined Queen Elizabeth II, and other members of the royal family at the service. Leaders from Australia, Canada and other countries were also present, along with U.S. First Lady Laura Bush. In a statement, the First Lady memorialized the late Queen Mother as noble in every sense of the word, serving her family from the dark days of World War II to the dawn of a new millennium.

Araya out of hospital
but still in neck brace

By the A.M. Costa Rica staff

Former presidential candidate Rolando Araya Monge was out of Hospital México Tuesday but still wearing a neck brace.

Meanwhile, the Judicial Investigating Organization said it had assumed the lead role in investigating the incident in which Araya was slugged, knocked down and lost consciousness. That happened about 8 p.m. Monday when a crowd began acting up in front of the ex-candidate’s boyhood home in Palmares. Two youths were being held.

Araya told reporters that some in the crowd were making insulting remarks and his adult sons went outside to respond. Araya said that because he was a recognizable public figure he thought he would be able to calm the situation.

Araya suffered an injury to the back of his head when he fell to the ground, and he was still wearing a brace because his neck was injured by the impact of his head hitting the ground. He was the candidate of the Partido Liberación Nacional.

Leaders of the victorious Partido Unidad Social Cristiana, including President-elect Abel Pacheco were mortified because the assailants were identified as their supporters. 

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