Backers Model Proposed Costa Rican Security Tax on Colombian Success
By Dialogo September 26, 2011
Costa Rica’s national police force makes do with fewer than 300 vehicles. The National Coast Guard, which patrols 1,290 kilometers of Caribbean and Pacific coastline, has only 26 boats. As for aerial patrol, Costa Rica possesses only one helicopter and six airplanes.
“There is no way we can adequately confront national security issues and drug trafficking with such a lack of resources,” said Mauricio Boraschi, vice-minister of national security issues and director of the Drug Control Police (PCD). “If this country is going to solve these problems, we’re going to have to dig into our own pockets and fund the fight. It will require an investment in security this country historically has never had to match.”
President Laura Chinchilla agrees. In early August, she sent a proposal to the Legislative Assembly known as the “Impuesto a las Personas Jurídicas” or “sociedades anónimas” tax. If passed, this “S.A. law,” as it’s known, would levy an annual $300 surcharge on every one of Costa Rica’s 485,000 businesses, large and small. The tax would raise approximately $145 million annually, with half that amount going toward improving security forces and acquiring equipment, vehicles and training.
“Our police do what they can with very few resources,” Chinchilla said. “But it is not enough to provide the type of security the people of this country deserve…approving this law represents a large step in reaching the proposed goals of this administration and for creating better tools to improve the quality of life for Costa Ricans.”
To encourage the bill’s passage, Chinchilla has pointed to the successes of similar taxes in other Latin American countries, most notably Colombia. In 2002, then-Colombian President Álvaro Uribe signed into law a tax on the country’s largest businesses “to ensure the democratic security” of a country in the midst of a drug war.
Weeks after Costa Rica’s Legislative Assembly began considering the bill, Chinchilla invited Uribe to San José to discuss Colombia’s experience with the tax law and what it accomplished.
“In Colombia, we knew that it was necessary to increase security resources, so we established a new tax for the wealthiest sectors of the country,” Uribe told Costa Rican lawmakers, conceding that despite initial resistance to the tax, most businesses agreed to pay, given Colombia’s grave security issues at the time.
Within a few years, Colombia saw dramatic improvement. During Uribe’s eight years as president, the homicide rate plummeted from 68 per 100,000 inhabitants to around 32 per 100,000. National police forces doubled from 70,000 to 140,000, and Colombia’s reputation was transformed. “The tax didn’t only increase security, but it also increased education, health and social well-being,” said Uribe. “Those who paid the tax were rewarded by improvements in the national economy.”
Two other Central American nations, El Salvador and Honduras, are mulling similar security taxes of their own. Mauricio Funes, president of El Salvador, says his proposed tax on 2,360 “high net worth” taxpayers and corporations will raise $120 million a year in the fight against crime.
“We’re thinking about a tax that is not going to affect the country’s process of economic recovery,” Funes told lawmakers in late May, indicating that small and medium-sized businesses would not be subject to the levy.
In Honduras, authorities hope to collect the equivalent of $80 million annually through a similar tax, according to Santiago Ruíz, president of the Honduran Private Enterprise Council (COHEP). It appears likely that such a tax would be applied exclusively to the country’s largest businesses.
Costa Rica’s crime situation isn’t nearly as dire as Colombia’s during the 1990s or that of either Honduras or El Salvador today, though many locals do fear that their country – which abolished its army in 1948 -- will lose its peaceful reputation if security continues to deteriorate.
“What has made our country great is our commitment to peace and decision to disarm,” Chinchilla said. “The security problems we face today are threatening everything the people of this country have worked so hard to create.”
Tax on hold
The measure passed a first vote in the Legislative Assembly in early August, and is expected to be taken up again by lawmakers in October. Government representatives are confident the bill will pass. Public Security Minister Mario Zamora, who said he hopes legislators “make the right decision with the best interests of the country in mind,” already has plans for how the potential bonanza will be distributed.
Topping his list are patrol vehicles. Costa Rica has about 270 police vehicles, which explains the increased sense of insecurity on the streets and a notoriously slow response time to crimes in progress. In some rural areas, depending on the terrain, police can take several hours to arrive at a crime scene.
“The first thing we would do with the funding is buy more patrol cars. We hope to more than double the number we currently have in operation,” Zamora said. “With more patrol cars, the police are more present and more preventative. Right now, crimes occur in the streets because there is little fear of getting caught. That needs to change.”
Average Costa Ricans say they welcome more police on the streets.
“I’ve lived here for 19 years and the security situation has gone from bad to worse’” said Nichole Dupont, a resident of Drake Bay on the southwestern Osa Peninsula. “We only have two police officers and about 1,100 people. The phone at the police station doesn’t work and they don’t have an all-terrain vehicle. Criminals are free to do as they please here. They have no fear of being tracked down by inefficient police.”
If Costa Rica’s Legislative Assembly passes the tax, the expected $72 million will be used to buy at least 400 new police vehicles, which will be distributed throughout the country, including rural areas with little security presence. Zamora said that passing of the S.A. tax is top priority for the Public Security Ministry.
“We will be able to hire more and better trained police with better equipment and infrastructure and more vehicles,” he said. “The capabilities of the National Police force will be much stronger and we will have a much broader reach. If we have an additional $72 million to spend each year, there is no doubt in my mind that national security will be much, much better.”
FINANCING FOR THE NATIONAL POLICE ...... OR ANY OTHER ITEM? COLOMBIAN INITIATIVE.