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Costa Rica's tax reformers accused of evasion

Taxman cometh. Taxman resigneth.

Costa Rica's government has fought hard to pass tax hikes in order to rein in a widening budget deficit.

President Laura Chinchilla's critical oversight? It seems she forgot to ask her staff if they were paying their taxes.

Apparently not all of them were. Now heads are rolling.

The finance minister and the head of direct taxation resigned this week after reporting by La Nacion newspaper revealed that they were evading taxes.

Several other members of Chinchilla's cabinet face similar accusations. But the fact that the very architects behind the president's proposed tax overhaul underpaid into public coffers serves a huge blow to the Chinchilla administration and its reforms agenda.

"In a [European-style] parliamentary system, it wouldn't be an exaggeration to say that a similar crisis would threaten to bring down the government," Juan Carlos Hidalgo, Latin America analyst with Washington's Cato Institute, wrote on his El Financiero newspaper blog.

That won't happen to Costa Rica's government, which elects its president and 57-member Legislative Assembly every four years. 

The bid for new and higher taxes was already a hard slog in a country deemed pricey for the region. Now, with the taxman himself proving to be an evader, it's just been made toxic.

http://www.globalpost.com/dispatches/globalpost-blogs/chatter/costa-ricas-tax-reformers-accused-evasion

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