As Costa Rican President Luis Guillermo Solís finishes the final year of his term, he urged legislators to focus on eight priority pieces of legislation in his address to this nation earlier this week.

The first of these is relating to the value added tax, or VAT. Under this legislation, the current sales tax would become a value added tax (VAT), but remain at the same 13 percent rate.

The proposed bill would increase the tax base so the VAT would be applied to more goods and services including tourist services, lawyer fees, rentals, and gyms, as well as to all for-profit cultural, sporting, artistic, educational and recreational activities.

The proposal includes a 4 percent VAT for private health and educational services, which would apply to all private schools throughout the country. In addition, rents above a base salary of approximately 410,000 colones (about US$745)  would be taxed; and businesses would pay tax on electricity and water over a certain consumption level.

Public transport, the sale of companies in free trade zones, and financial investments and interest accruals would be exempt under the new law. The legislation also includes a tax exemption for people whose households have earnings of less than ¢342,000 per month (about US$620).

The second priority piece of legislation for Solís is also tax-related, as he seeks to increase government revenue. This bill calls for increasing taxes on the country’s highest wages from 15 to 20 percent. In addition, tax on capital income, that is, money earned from the sale of bonds or shares, would increase from 8 to 12 percent.

The third priority bill announced by Solís takes aim at organized crime with legislation on forfeiture of ownership that would grant the state the power to appropriate goods that are determined to have been purchased with illicitly procured funds.

The fourth legislative priority announced by Solís in his address to the nation includes legislation on appropriations of land needed by the Ministry of Public Works and Transport to complete the last section of the Florencio del Castillo highway in Curridabat.

A legislative proposes to allocate more resources to the train system is high on the list as well. Resources would be generated by increases in annual car circulation fees, on car import taxes, and on increased highway toll rates; as well as through a one-time contribution of ¢500 million from the Road Safety Fund (Conavi).

Solís also wants legislators to give top priority to the languishing animal welfare bill which stipulates sanctions and even imprisonment for the mistreatment or killing of pets.

Legislators have been asked to consider a reform to the National Council of Higher Education (Conesup) which will require higher standards from private universities, especially in education, health and engineering degree programs.

And the final priority legislative item announced by Solís, is the reform of the country’s psychotropics law (filed as bill number 19,951). The new law aims to regulate non-financial activities that are vulnerable to money laundering such as real estate, casinos, sport books, lawyers, notaries and public accountants, as well as metal and precious stone dealers. Individuals in such businesses would have to register with the Ministry of Finance at a special supervisory office that would be established.

Solís said that this last initiative is urgent to prevent the country from being placed on the “gray list” of countries viewed as non-cooperative on anti-money laundering and at high-risk for financing of terrorism by the Financial Action Task Force (FATF). The FATF is a body of the G20, the group of industrialized and emerging states, that sets international standards on controlling such illicit activities. Countries on the FATF gray list can face international sanctions that can affect financial institutions and international trade, said Solís.