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These stories were published Monday, April 26, 2004, Vol. 4, No. 81
Jo Stuart
About us
Unusual property tax system hurts newcomer
By Garland M. Baker
Special to A.M. Costa Rica

First there was arithmetic, and then came new math, and now Costa Rica has introduced tax math.

Aristotle, the Greece philosopher, was the first ever to theorize this kind of geometric mathematics in his book The Physics. So no one should be surprised Tributacion Directa, the Costa Rican tax authority, much like the IRS in the United States, and Hacienda, the Costa Rican treasury, has decided to use it in calculating tax values on property.

Here is how it works. Let’s say your property has a value of $50,000 and the property is transferred, mortgaged, or sold, for $100,000. The new value is added to the original value at the Registro National, the Costa Rican public records office.  Please note, the new value does not replace the old value but is added to it. The tax value now is $150,000.

This is especially true if the property is mortgaged because the lender is required by law to report the appraised value immediately by computer to the records office. When the property is transferred again, for whatever reason, the new amount is added again to the existing base.

On a $100,000 property, the tax value base could easily be $400,000 in a few short years after a couple of sales.

Property taxes are levied at 2,500 colons for every 1 million colons of value. Using the current exchange rate of 430 colons to one U.S. dollar, the tax on the original value in the above case would be 53,700 colons.  Once the property is transferred and the new value is added to the original, the new tax would increase to 161,500 colons.  After another transfer the tax goes to 322,500 colons and so on.  Someone with many properties who borrows against them often can be driven into the poor house with balooning valuations.

Collecting property taxes was passed to the municipalities in 1995, and local officials do not believe you should question the venerable judgment of the tax authority if you should go to complain.  You will meet surprised faces if you take updated appraisals to the municipality office.

In other words, they will not accept your paperwork, even though they are required to by law, to bring your property value back into line.  If you try to explain to the tax collectors that Aristotle was talking about geometric progression as it applies to biology and not taxes you only get blank looks.

With this kind of computerized tax assessment, you could have a tax value on your property 10 times that of your neighbors because you recently purchased it and your neighbor has lived on their property without any kind of transfer for years.

There is a way to fight back if you find your property value in outer space. You need to have an attorney prepare an acta notarial, a legal notary document, attesting to the fact you tried to deliver new property valuations to the municipality.  Then you need to have the attorney send the documents via Costa Rica’s not-to-well-known EMS service, the country’s version of FedEx, to the property tax department where municipal officials blindly sign for the envelope unaware of what is inside. This acceptance will start an administrative review of the case. 

Usually, officials will immediately contact you and set up a meeting to review the matter.  If 

your valuation documents are in order, a more correct value will be assigned to the property and your taxes will immediately decrease.

The law that moved the collection of territorial property taxes to the municipalities requires individual property owners to provide new property values every five years to the tax authority.  Non-compliance could mean having a tax assessor on your doorstep using a version of tax math to update the tax records.

Virtually no one complies with the five-year rule or even knows the tax value of their property in the National Registry.  Actually, most foreign investors don’t even know where to pay their property taxes or if the taxes have been paid. 

Fines and interest on any past due taxes in Costa Rica are outrageous, and unpaid amounts can have your property embargoed and sold at auction.

It is best to check to see if you are up-to-date with the powers-that-be and pay your municipal and territorial taxes promptly.  You may have to have someone investigate whether your property is correctly registered to you and has a plano catastro, or plat plan, in your name.  Most properties sold or otherwise transferred before 1998 are not registered correctly and the registration needs to be fixed before taxes can be paid or disputed.

Garland M. Baker is a local businessman who provides business services to the international community. He may be reached at info@crexpertise.com. Mr. Baker has undertaken the research leading to this series of articles in conjunction with A.M. Costa Rica. Lic. Allan Garro, provides the legal information and can be reached at law@licgarro.com

New arrival tax
judged to be unfair

By the A.M. Costa Rica staff

Raising property assessments only when there is a sale or other transaction has been adjudged unconstitutional in several U.S. jurisdictions.

Through the 1960s, such official actions were called the "Welcome, homeowner" tax because new arrivals to a community usually faced a steep increase in property assessment based on the purchase price of their home. Meanwhile, the assessments of their neighbors did not change.

The system favored the long-time resident, the landed and the entrenched.

Now most U.S. jurisdictions use systematic reappraisals in which professionals evaluate each property based on current market conditions on an established schedule.

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Prostitution suspects
get two more months

By the A.M. Costa Rica staff

The suspected leader of a prostitution ring will spend two more months in preventative detention while the investigation continues.

That was the ruling of the Juzgado Penal of San José. The case involves a woman with the last names of Monge Muñoz and a man with the last name of Poltronieri.

The Hatillo-based network included a high percentage of prostitutes between the ages of 14 and 17, according to officials.

The ring was well known in the North American community and also among highly placed Costa Ricans. Agents are investigating allegations that official cars were seen at the home where the ring was headquartered.

The arrests came during a raid Oct. 9 when investigators used two young woman as decoys who contacted the operation with the story that they were underage but sought work as prostitutes.

Hitting your child
would be illegal

By the A.M. Costa Rica staff

A bill has been presented to the Asamblea Nacional that would prohibit corporal punishment of children by their parents.

The measure had been expected. One of the sponsors of the measure is Margarita Penón Góngora, who said that the bill is important because the future success of children depend on the relationship they have with their parents.

The measure, if passed, also would prohibit anyone who happens to be in charge of a child from administering corporal punishment. The Patronato Nacional de la Infancia is supposed to provide leadership in instructing adults in other methods of discipline.

U.S. give $700,000
for inspection setup

By the A.M. Costa Rica staff

President Abel Pacheco had kind words for the United States Friday as he spoke at an inauguration ceremony for the new inspection facilities at the Peñas Blancas border crossing point with Nicaragua.

The president also revealed in a speech that the United States donated $700,000 of the estimated $1 million cost for the inspection station. The inspection station contains facilities for immigration, drug police and the Fuerza Pública K-9 unit.

The facility has been in operation and already has resulted in seizures of substantial quantities of cocaine, as reported here in March. 

The facility includes an inspection station for heavy trucks that seem to be the method of choice lately for smugglers who are trying to carry cocaine into Nicaragua.

The United States has an interest because most of the drugs are headed there eventually.

Peru's largest airline
barred from U.S. routes

By the A.M. Costa Rica wire services

U.S. and Peruvian officials say that Peru's largest airline, Aero Continente, has been temporarily banned from entering U.S. airspace.

Peru's Civil Aviation authority suspended the airline's flights to the United States at the request of U.S. Federal Aviation Administration Thursday. The FAA had cited unspecified safety concerns with the airline. 

Officials with Aero Continente deny there are any safety problems. Until the ban is lifted, the airline says it will lease aircraft from other carriers to maintain its four flights a week schedule between Lima and Miami.

New rector is picked

By the A.M. Costa Rica staff

A University of Costa Rica history professor, Yamileth González García, has been elected rector of that institution. She becomes the first woman to hold the top spot at the university.

The professor won a four-year term against three male candidates. More than 2,000 members of the university community voted.

Probably more rain

By the A.M. Costa Rica staff

An unstable atmosphere means more rain for the south Pacific coast and along the Caribbean today, according to the weather bureau.

This is the same low pressure area that has caused rain Saturday and Sunday.

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Fed governor discounts fears of dollar drop
Special to A.M. Costa Rica

WASHINGTON, D.C. — A Federal Reserve governor rebutted speculation that the growing U.S. imbalances in trade and investment could lead to a disorderly, damaging correction in which a sharp drop in the foreign exchange value of the dollar would cause sharp drops in stock and bond prices.

"I have seen little evidence to suggest that this scenario is likely, notwithstanding its popularity," said Roger Ferguson, vice chairman of the U.S. central bank.

He made the remarks Friday here to the European Institute Roundtable on Financial Affairs.

Neither the decline in the dollar in the 1980s nor the current decline that started in 2002 has disrupted financial markets or affected inflation much, he said.

Ferguson identified several possible reasons for the continued investment flowing to the United States that allows the U.S. trade deficit to continue expanding: U.S. political stability; sound economic policies; and effective legal, financial and educational systems.

Also, he said, recent strong labor productivity bolstered by rapid diffusion of technological innovation has accounted for more favorable investment opportunities in the United States than in other economies.

Although the U.S. trade deficit and associated external debt cannot continue to increase indefinitely, he said, any adjustment need not hurt the global economy. For example, other parts of the world could start to attract foreign investment for positive reasons, he said, such as increased productivity in Europe, financial reform in Japan, economic reforms in Latin America, and revived economic demand in Asia.

"Strong domestic demand among our trading partners would likely outweigh any drag resulting from appreciation of their currencies," Ferguson said, "while U.S. exports would benefit from both a change in relative prices and stronger foreign growth."

Also on the positive side, he said, the United States could reduce the savings gap that invites foreign investment either by reducing the federal government budget deficit or by increasing personal savings.

Health officials embark on massive hemisphere vaccination drive
By the A.M. Costa Rica wire services

The Pan American Health Organization, PAHO, is launching a vaccine program in the Americas with the goal of inoculating 40 million people in 35 countries against preventable diseases.

The campaign, known as "Vaccination Week in the Americas" begins Saturday and will be launched in Haiti. Canada and the United States are among the countries taking part in the campaign. The project will mainly target children, especially those living in rural border areas.

The Pan American director, Dr. Mirta Roses, said 

the immunization campaign demonstrates a strong commitment to working together to improve the health of the people in the Americas, especially the children.

Officials also said in a joint statement with the United Nations Children's Fund that millions of children in the hemisphere are not fully protected from deadly childhood diseases. 

In Haiti, where half the youngsters are not routinely vaccinated against preventable diseases, the campaign is an opportunity to promote stability and peace as the nation rebuilds, officials said. The immunizations run through April 30.

Thousands rally against crime in Argentina where rate is up
By the A.M. Costa Rica wire services

BUENOS AIRES, Argentina — Tens of thousands of Argentines have staged a protest rally outside a Buenos Aires courthouse to demand that authorities get tough on violent criminals.

Juan Carlos Blumberg, whose 23-year-old son Axel was slain by kidnappers in mid-March, led a crowd of at least 70,000 marchers who carried candles to the capital's Tribunal building.

A similar demonstration earlier this month drew 

more than 100,000 people who called on the government to increase its prosecution of violent offenders and sentence them to prison longer. 

The slaying of Blumberg's son shocked many Argentines and helped stir public anger against violent crime in the country, where murders, rapes, and robberies have been on the rise.

The recent anti-crime campaign has prompted Argentine President Nestor Kirchner to announce a plan to restructure the police forces, and create a federal investigative agency to fight crime.

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México, U.S. at odds over release of financial info
By the A.M. Costa Rica wire services

U.S. and Mexican officials are expected to meet within the next few weeks to discuss how to resolve a dispute that has halted cooperation on financial investigations. 

U.S. Treasury Secretary John Snow and Mexican Finance Minister Francisco Gil Diaz met Saturday on the sidelines of the International Monetary Fund meetings in Washington to discuss the U.S. decision to stop sharing sensitive intelligence. 

The United States announced Friday it had stopped sharing confidential financial information with México because some of it had been made public in México. 

The move came after Mexico City Mayor Andres Manuel Lopez Obrador divulged secret documents 

during a news conference, saying he was trying to defend himself in a scandal involving the city's finance director. It was unclear where Obrador got the documents that apparently described the official's lavish life style. 

The finance director was shown on Mexican television last month gambling in Las Vegas. He has since disappeared along with large amounts of government money. 

Snow said Saturday the leak was unfortunate but expressed hope the information exchange with Mexico would resume soon. 

Officials in both countries monitor financial transactions for signs of money laundering, drug trafficking and activities related to terrorism. The dispute affects the monitoring of about 30,000 transactions a day.

On-air crank call to Castro draws a fine for Miami radio station
By the A.M. Costa Rica wire services

WASHINGTON, D.C. — The U.S. government agency charged with regulating the broadcast media has fined a Spanish-language radio station whose announcers made a prank call to Cuban leader Fidel Castro. 

The station in Miami, Florida faces a $4,000 penalty for the June 17, 2003, call in which the 

two announcers told Castro he was an assassin. The conversation ended with the Cuban leader denouncing his callers using a stream of vulgarities. The station repeatedly re-broadcast the exchange. 

The Federal Communications Commission imposed the penalty Friday because the station aired the conversation without notification to Castro. The station has 30 days to either pay or appeal.

Venezuela suspends the importation of firearms to cut crime
By the A.M. Costa Rica wire services

CARACAS, Venezuela — The government is suspending gun imports in a bid to reduce the nation's soaring crime rate.

Defense Minister Jorge Garcia Carniero made the announcement Friday. He also said the government will freeze firearms licenses until the national registry of legal gun owners can be updated. 

Venezuelans who already have gun permits will have 90 days to renew them, he said.

Venezuelan government statistics show that more than 9,500 homicides were recorded in 2002, a jump of 30 percent from the year before.

Venezuela has suffered upheavals in the past two years due to a slumping economy and violent pro and anti-government demonstrations.

Jo Stuart
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