A New Tax on Luxury Costa Rican Cars in the Works for December.

Yesterday, it was announced that beginning Monday, June 23, a new Pico y Placa program would restrict vehicle usage during rush hour, depending on license plate. Today, we learn that more changes are in store for the Costa Rica Travel scene, beginning with a double tax on diesel-fueled vehicles, as well as an increased yearly tax for the country’s luxury cars.

There are currently about 66,000 registered personal-use vehicles that use diesel in Costa Rica, and the Minister of the Treasury, Guillermo Zúñiga, said that the government hopes to double the marchamo (yearly tax and registration) on all personal-use diesel vehicles. However, in an effort to lighten the financial load on these owners, they will eliminate the tax on diesel fuels, while raising the tax on all three types of gasoline. Vehicles used for public transit, cargo, and work vehicles will be excluded from the double marchamo.

Though doubling the marchamo while lowering diesel prices doesn’t seem to make much sense, in fact, it does. The government is very concerned with how higher gas prices have affected those less well-off, and since the country’s poorer citizens usually take public transit, these vehicles will actually have their financial load lightened – no double marchamo and lower diesel prices mean fewer increases in bus fare.

In December, if the new tax is approved, it’s predicted that the 66,000 owners of personal-use diesel vehicles will pay ¢8.5 billion ($17.17 million) extra. In total, the country will collect about ¢17 billion ($34.34 million) in marchamos for these vehicles, in effect, paying a luxury tax on their cars and trucks for the right to use the lower priced diesel fuel.

However, diesel vehicles will not be the only ones affected by a tax, as the Treasury has also announced its intent to raise yearly taxes on luxury vehicles, as well. The increased tax hopes to soften the economic blow to Costa Rica, caused by increased gas prices, food prices, the strengthened dollar, and the slowdown of the U.S. economy. The Minister of the Treasury says that Costa Rica hopes to raise an additional ¢20 billion ($40.4 million) extra through the luxury car tax.

Cars such as Toyota 4×4’s, a popular luxury car, will be subject to the new tax, and future owners must take note: their marchamos will go up about 100% percent, doubling like those of diesel vehicles. In 2008, Costa Rica expects to pay an astronomical $2.8 billion on gasoline, a large increase from 2007. Therefore, in addition to increasing funds for Costa Rica, the government hopes that the new tax will help discourage unnecessary luxuries, like gas-guzzling 4×4 vehicles that are only subject to city use by small families.

Costa Rica is cracking down on luxury vehicle usage, taxing their users double what it used to. At the same time, the government is trying to cushion the blow for those less well-off, by eliminating taxes on the diesel which fuels the country’s mass transportation vehicles. Hopefully, the combined effect will be less cars on the road, fewer colones spent on gasoline, and more Costa Ricans riding the reliable public buses that are so prevalent.

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Filed under: Living on June 20th, 2008