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Fiscal Reform approved on December 3 by the Costa Rican government despite protests

On December 3 the Legislative Assembly reportedly ratified a fiscal reform in order to attract international investors and decelerate debt. The reform increases the income tax that is paid by the wealthiest sectors of the society, taxes capital income and establishes a VAT. Furthermore, it limits public spending and curtails bonuses afforded to state workers. The latter point prompted unions, mostly in the education sector and in the judiciary, to call for demonstrations over recent weeks, the largest of which was witnessed on December 7 amid a strike. According to the government, the reform will increase GDP by 1.2%, growing to 3.7% by 2022. While the government reportedly reached an agreement with education workers, detractors of the fiscal reform within the judicial system announced that they will continue striking until December 19, when the Appeals Court is expected to pass a ruling on the legality of the strikes.

Minor disruptions are likely to take place in urban centers and in the vicinity of government buildings over the coming weeks, regardless of whether strikes are deemed illegal. That said, taking into account recent successful negotiations between the government and education unions, there is a possibility that judiciary employees will reach an agreement with the executive before December 19. In any event, demonstrations will probably transpire largely peaceful, without causing major hindrances or disruptions.

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