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(506) 2223-1327           Published Thursday, Nov. 10, 2011, in Vol. 11, No. 223       Email us
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Tax plan would be a hit for builders and realtors
By the A.M. Costa Rica staff

The Chinchilla administration tax proposal now being considered in the Asamblea Legislativa will have a major effect on the construction and real estate markets, two sectors that still are struggling to recover from the economic downturn.

The construction chamber estimates that the proposed 14 percent value-added tax will add between 8 and 12 percent to the cost of a home. Similar percentages will be tacked on commercial construction.

In addition, the tax plan proposes to raise the real estate transfer tax from 1.5 percent to 3 per cent. That alone will result in $1,500 more tax on the sale of a relatively modest $100,000 home or condo. The construction of such a dwelling would mean $8,000 to $12,000 more investment, and none of that is profit to the builder or developer.

The chamber, the Cámara Costarricense de la Construcción, seeks a special and lower value-added tax rate for construction projects and the continuation of the existing 1.5 percent transfer tax. However, the organization has not been able to present its views to the nine-member legislative committee that is studying the measure. It said the most recent request to be heard was rejected by the committee.

The chamber also said that contractors seek to pay the value-added tax over three months instead of immediately to improve cash flow.

The value-added tax being considered now is a product of negotiations between Casa Presidencial, the administration's political party, Liberación Nacional, and opposition parties that now control the legislature. A package with higher taxes appears to be highly likely, and lawmakers have sought to consider the measure on what they call the fast track where debate and amendments are limited.

Under the current proposal, engineering and architectural fees would be subject to the higher value-added tax. Such professional services are not taxed now, and building supplies are taxed at the current 13 percent rate.

A construction chamber statement also said that its members were worried about how construction in progress would be treated if the tax passed quickly. It suggested that these jobs be exempted from the broader taxes.

Some lawmakers have challenged in court the treatment of the fast track for the proposal.

That procedure was set up to limit debate on proposed laws linked to the free trade treaty with the United States and served to expedite passage against strong opposition.

Although new construction would be made more costly by the tax proposals, they would seem to have a favorable effect on resales where the owners of existing properties do not have to pay taxes on professional services.

Buyers still would have to pay a higher transfer tax if the proposal becomes law.

Still unclear is the way real estate commissions would be treated. Such professional income would seem to be subject to the proposed value-added tax, but commissions are not all profit.

President Laura Chinchilla Miranda is anxious for passage of the bill because the central government is deep in the red.

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A.M. Costa Rica's professional directory is where business people who wish to reach the English-speaking community may invite responses. If you are interested in being represented here, please contact the editor.

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Our readers' opinions
Guatemalan drug violence
stems from impunity there

Dear A.M. Costa Rica:

Your piece on Guatemala today made some excellent points about the perils facing those in Guatemala working to expose the causes of the country’s endemic violence and conflict.  It is a distortion of reality to only point to drugs as the root of the violence there, as you point out. 

Certainly, drug trafficking is a large part of the causes of violence there.  But drug violence is really only symptomatic of a larger cause of violence in Guatemala — violence perpetrated with impunity by those who have powerful economic and political interests against anyone who threatens those interests, including human rights activists, social welfare activists, and environmental protection advocates.

In 2008, someone pumped several bullets into Dr. Yuri Melini, the director general of CALAS, an environmental law non-governmental organization that had been working to strengthen legislation and management of Guatemala’s significant environmental patrimony.  Melini lived, but to this day, no one has been held accountable for that attack, though suspicion centers on those whose interests would be affected by enhanced environmental protection in Guatemala — mining companies, timber companies, and perhaps drug cartels that use northern rain forests to move drugs to the U.S. 

If you oppose powerful interests in Guatemala – legal or illegal – you put yourself at risk, and those charged with upholding the law – police and other security forces – may not be there to help you or bring the perpetrators to justice.  Rights groups despair at Pérez Molina’s recent election because some see him in the service of those same powerful interests at the root of so much violence in Guatemala.  The burden of proof is upon the president-elect to prove them wrong, and upon all of us to hold the Guatemalan government accountable if they don’t eliminate the impunity of those at the root of Guatemala’s violence.
Tom Deligiannis
University of Western Ontario

Science seeks to show
probability of relationships

Dear A.M. Costa Rica:

In response to the letter in which Gregg Calkins disputes A.M. Costa Rica's claim that proving causation in science is difficult, I'm afraid that Mr. Calkins is mistaken.

Actually, science never proves anything. The scientific method seeks to disprove the null hypothesis, which asserts that there is no relationship between hypothesized variables. Insofar as experiments or other investigations can disprove the null hypothesis, scientists (and the public) can be increasingly certain that the hypothesized relationship exists between the variables. However, that certainty is never 100 percent, and logically can’t be, since no one can ever be sure that the results won’t be different tomorrow. In practice, science has adopted statistical conventions for reporting findings. These get complicated fast, but they basically calculate the likelihood that a discovered relationship between variables did not occur by chance.

However, the statistics are almost never 100 percent, and, in fact, even statistically significant relationships between variables usually only explain only a small part of their association.

With respect to cause, things get even more complicated.  Most scientific findings are simply correlations — two variables have some statistically significant relationship with one another — but it’s anyone’s guess which caused which or whether a third unknown variable is causing both. In general, the only way to get a handle on cause (and it is only a handle, since science remains in the business of disproving the null hypothesis) is with controlled laboratory experiments. These are necessary in order to eliminate as many of the other variables as possible in order to see whether the hypothesized causal variable is really doing the causing.

Enter the obvious difficulty with demonstrating cause in the case of the global warming thesis: You can’t put the globe in a laboratory. As a result, almost all scientific evidence (some questions can of course be replicated in laboratory settings) comes from the messier real world where there are thousands of uncontrolled variables, any of which could be causal. Mr. Calkins provides an excellent example of this scientific difficulty by noting (I assume correctly) that the earth has actually cooled rather than warmed over the last decade. The problem here is that temperatures are going to fluctuate, some simply by chance. 

Another problem, noted in the A.M. Costa Rica column, is that there are long-term trends operating that cool or warm the earth over centuries. To find out whether global warming is or isn’t occurring as a result of humanity’s (poor?) stewardship of the earth requires somehow teasing both random and long-term trends apart from those that can be plausibly attributed to human stewardship.

I don’t have the faintest idea where the bulk of the evidence lies on this crucial question, so won’t offer an opinion. However, I believe the discussion of this issue would be more fruitful if all concerned has a better understanding of the scientific enterprise that should ideally inform it.

Ken Morris
San Pedro

Find out what the papers
said today in Spanish

By the A.M. Costa Rica staff

Here is the section where you can scan short summaries from the Spanish-language press. If you want to know more, just click on a link and you will see and longer summary and have the opportunity to read the entire news story on the page of the Spanish-language newspaper but translated into English.

Translations may be a bit rough, but software is improving every day.

When you see the Summary in English of news stories not covered today by A.M. Costa Rica, you will have a chance to comment.

This is a new service of A.M. Costa Rica called Costa Rica Report. Editor is Daniel Woodall, and you can contact him HERE!
From the Costa Rican press
News items posted Monday through Friday by 8 a.m.
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This is Loma Morera some 120 meters (394 feet)  high and just 2.5 kilometers (1.6 miles) southeast of Agua Zarcas. The deformed volcanic crater can be seen clearly. There is a road to the summit.

Loma Morera
Observatorio Vulcanológico y Sismológico/Eliecer Duarte González

Baby volcanoes near Agua Zarcas seen as a tourist draw
By the A.M. Costa Rica staff

A field of seven small volcanoes in the vicinity of the community of Agua Zarcas do not appear to be a threat and, instead, could be a tourist draw.

That is the conclusion of a study by experts at the Observatorio Vulcanológico y Sismológico de Costa Rica who just released a report. The study included an overflight of the 48-square kilometer area.

That's about 18.5 square miles.

The volcanic field is north and east of Aguas Zarcas, which is in San Carlos, Alajuela. As the name implies, the region is famous for thermal pools.

The volcanoes are nothing like the towering Arenal to the west. Most are tree- and brush-covered low hills,

Most are called by the Spanish word for hill, loma.

One,  Loma Morera, still holds the form of a crater. Two other hills have been worked to extract the volcanic material that at one time flowed from the opening in the ground.
The hills were formed by the expulsion of lava and other volcanic material from inside the earth. The researchers concluded that due to the time that has passed and the local geological stability, the volcanoes do not represent a threat to the human neighbors. Five volcanic hills can easily be seen to the north of Agua Zarcas. In other cases, farming and living quarters are close by the hills.

The small community of Pitalito is between two such hills.

This is the only such area in Costa Rica, the report said, although such formations are common in Australia, New Zealand, Germany, France and Spain, the researchers said.

Because they are unique here, the researchers suggested that the ring of volcanic hills could generate tourism in the future. They said that the hills should be conserved for future generations and that a management plan should be devised. Much of the land is in private hands.

Two of the hills show signs of having been quarried for the volcanic materials. The researchers also said that erosion from the rainy climate would affect the hills and that some form of conservation should be considered. Most of the hills are tree-covered.

Central government announces three more digital initiatives
By the A.M. Costa Rica staff

The central government announced three more digital initiatives Wednesday, including a Web site that is supposed to aid in searching for information among the various government agencies.

The announcement coincided with the Congreso Innovación en Gobierno Digital that central government officials attended.

One initiative is a site operated for the Dirección Nacional de Pensiones of the Ministerio de Trabajo y Seguridad Social. There the estimated 58,700 pensioners from public jobs can access their files online. Nearly all that work is done manually now, said Sandra Piszk, the minister.

The portal for citizens will be The site is expected to go into operation Dec. 15.

The third initiative is called Proyecto Tecnoeducar, which
 seeks to give computers with Internet connections to most of the rural public educational institutions.

The first beneficiaries are students in the cantons of Tarrazú, Santa María de Dota and León Cortés.

Edwin Mora, the local educational coordinator, used the conference to demonstrate the system. He contacted the Escuela El Cedral for a videoconference.

The pilot project eventually will include some 75 schools.

Part of the plan is to invite state agencies and private companies to donate used computers for the use of students, said Casa Presidencial.

The government already operates an online purchasing system, a network among municipalities and the Acuerdo Social Digital, which seeks to improve connection speed on the Internet, distribute computers to students and provide community locations where citizens can go online.

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Indignant ones are back with a vague manifesto for Friday
By the A.M. Costa Rica staff

The country's so-called indignant ones are uniting again Friday morning at the Plaza de la Cultura. The meeting has a spiritual touch because the group said that they would display mantras against social injustice at 11:11 a.m., a time when others in the world will seek to be united for a change in personal consciousness.

Los Indignados de Costa Rica are a local version of the occupy groups that are staging sit-ins at many cities in the United States. This will be their second gathering.

The theme here is that demonstrators want real democracy now, they said.

The Indignados also released a statement of position that they called a manifesto.

Among other points the group said that power in the world was in a hands of few persons while the rest are not assured of access to health, food, infrastructure, education and culture. It is a system, they said, that does not function in an egalitarian manner.
They also said resources are over exploited and that the rivers were being robbed by transnational companies, hydro projects were displacing native people and the damage to the ecosystem is irreparable.

They seemed to be talking about a project by the Instituto Costarricense de Electricidad in the Boruca region of southern Costa Rica and the private production of electricity by private firms with dams on the rivers.

They seek that the government regulates the financial markets to prevent speculation that causes hunger, misery, war and inequality in the world. They also demand a fundamental change in the structure of sectors that exercise power, but they did not explain further.

The manifesto also said that a new tax plan was not needed because what was needed were honest politicians, business people, and public and private employees.

The group said they sought a society with maximum respect for human beings and the biodiversity.

At no point were there specifics.

Pan-American Life to acquire MetLife's Costa Rican operation
Special to A.M. Costa Rica

Pan-American Life Insurance Group, a provider of life and health insurance in Latin America and the United States, has announced a definitive agreement to acquire select businesses and assets from MetLife. Pan-American plans to acquire MetLife's American Life and General Insurance Company unit in Trinidad & Tobago, along with American Life Insurance Company branches in Barbados, Cayman Islands and the majority of the Leeward and Windward Islands, and the ALICO operations in Panamá and Costa Rica. 

Through this transaction, Pan-American adds to its existing businesses in Panamá and Costa Rica and expands its presence in the Caribbean, the company said. In total, the businesses being acquired represent more than $125 million in 2010 premiums and $675 million in assets.

Pan-American Life Insurance Group estimated that it will
 have  $625 million in revenues, $2.8 billion in assets and more than 1,300 employees after the deal closes.

In connection with the transaction with MetLife, the parties anticipate that Pan-American will become the MAXIS Global Benefits partner in these markets, and also in Central America and Ecuador. MAXIS Global Benefits Network is a worldwide pooling arrangement created to deliver local insurance coverage to multinational companies through their own operations as well as independent carriers.

Both MetLife and Pan-American said they have received their required internal approvals, and the transaction is expected to close in the first half of 2012. The deal is subject to certain regulatory approvals and other closing conditions.

New Orleans-based Pan-American Life Insurance Co., the group's flagship, has been delivering financial services since 1911. It employes more than 800 worldwide.

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Medical vacations in Costa Rica

Big spike predicted
for world energy use

By the A.M. Costa Rica wire services

The International Energy Agency says the world could face viciously higher prices and greater risk of climate change unless there are major changes in the way nations, companies and consumers use energy.

Wednesday's report predicts that energy demand will grow 40 percent by 2035, which could push the price of a barrel of oil above $200.

The authors say the Middle East is the only place where oil production is likely to expand sharply to meet this demand, but that will not happen without significant investment in infrastructure.

The report also notes that Japan's recent natural disasters raised questions about the safety and future of nuclear power.  The authors warn that further cuts in atomic energy would complicate efforts to meet energy demand without increasing carbon output linked to climate change.

The report predicts a modest decrease in the percentage of energy that comes from fossil fuels and modest gains for renewables over the next few decades.

The International Energy Agency calls for cutting the hundreds of billions of dollars that currently subsidize fossil fuels and doing far more to encourage growth of renewable energy sources.

Italy is latest casualty
in European meltdown

By the A.M. Costa Rica wire services

Europe's financial and political problems deepened Wednesday, as stock markets tumbled, Italian bond yields rose over the political turmoil in Rome, and a new coalition government prepares to take over in Greece.

The eurozone crisis has risen another notch with Italy's government heading for the door, stock markets plunging and Greece in crisis.

Outgoing Greek Prime Minister George Papandreou announced agreement with opposition lawmakers on a new coalition government that likely will have to carry out austerity measures demanded by the country's international creditors.

And, after hanging on for weeks, veteran Italian Prime Minister Silvio Berlusconi now says he will resign and not run for office again.  President Giorgio Napolitano must either work on forming a new government or call early elections.

Rome becomes the latest casualty of the financial crisis that already has brought down the governments of Portugal, Ireland and Greece.  But as Europe's third-largest economy, Italy's skyrocketing debt and deficit are viewed as far more serious.

Analyst Ben May, with London-based Capital Economics, said it will take more than political change to put Italy on a healthier path.

"It is not just that the current government is not up to the job, but Italy has huge structural problems that are going to take years to resolve," said May. "And that, given that backdrop, it may well be very difficult for Italy to get its debt on a stable footing either without huge amounts of assistance from abroad or some form of a deal."

Eurozone countries are now scrambling to build a firewall to contain the spreading debt crisis. In an interview on France's RFI radio, French Foreign Minister Alain Juppe said the goals were clear.

Juppe said it was out of the question for Europe to abandon either the 17-nation eurozone or the euro. His remarks appear targeted at speculation that Greece could leave the currency union.

The fast moving events have left analysts like Janis Emmanouilidis, of the Brussels-based European Policy Center, uncertain about where Europe is headed.

"What is obvious is that the crisis has again reached a new level, a new phase. At the same time we are seeing E.U. member states,  specially Berlin and Paris, Germany and France, ready to act more boldly than they have this summer. At the same time, we do not know whether this crisis has reached a size in which it has become unstoppable or whether we are in a way in the final phase of it," said Emmanouilidis.

Greece's new coalition government must meet EU terms for a new installment of aid by December. After that, Greek officials say, they will be unable to pay their bills.

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Latin America news
Thou shalt serve time,
sinner that you are

By the A.M. Costa Rica staff

The biblical imperative embodied in the Seventh Commandment had no effect on a robber who pulled a knife and took cell phones from victims inside an evangelical church in Santa Bárbara de Heredia.

The Fuerza Pública said they had no trouble finding the principal suspect because he has a long record of criminality. They said they found five cell telephones and a knife.

Police identified the suspect by the last names of Oviedo Vargas.

Although stealing is a lesser crime than robbing, the commandment, which is the eighth in Jewish tradition, is considered to cover all such acts. The Costa Rican penal code breaks the acts down, but robbing churchgoers with a knife inside the building most certainly is a felony or delito.

Complaints about transport
fall through the cracks

By the A.M. Costa Rica staff

The nation's regulating agency said it received 304 complaints from citizens about various aspects of public transportation from January to October, but investigators were unable to open a file on any because of lack of documentation.

The bulk of the transportation complaints involved rates and failure to complete assigned routes, said the Authoridad Reguladora de Servicios Públicos.

However, the agency was able to open 202 investigator files involving electric companies, 95 for water service and eight for fuel companies, a spokesperson said.

The gap between initial complaints and investigatory files resulted from the great number of citizens who did not follow up on their initial contact, the agency said.

Problems with billing produced the most documented complaints, the agency said.

EU gives millions for security

By the A.M. Costa Rica staff

The European Union has donated 13 million euros to Costa Rica for its citizen security programs. That's about $17.6 million. The money goes directly to the national treasury for distribution in a way that has been agreed, said a spokesperson for the European Union here. The money is to strengthen institutional capacity for prevention and response to crimes and criminality, the spokesperson said.

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