The recent imbroglio over undeclared home values and unpaid taxes that resulted in the resignations of the Minister of the Treasury and the Chief Tax Collector is threatening to derail the Fiscal Reform plan backed by the administration of President Laura Chinchilla. Not surprisingly, the different political factions at the National Assembly are weighing in with their own fiscal reform ideas.

Is Costa Rica a good candidate for a flat tax? Such is the proposal voiced by Patricia Perez Hegg, Vice President of the National Assembly and a member of the Libertarian Movement in a recent guest editorial broadcast in Panorama, a daily show from the National Chamber of Radio Stations.

Here are some excerpts of Ms. Perez Hegg’s editorial:

After discourse and so-called debate concerning the Fiscal Reform plan, the legislation originally proposed by the Executive has been watered down to half of what it used to be. The anticipated revenue collection of 2.5 percent of the Gross Domestic Product (GDP) by former Minister Herrero has been reduced to 1.5 percent , and experts are revising that figure closer to just one percent. What would it take to admit that this proposal has failed?

To reform is to amend, to modify with the intention of improvement. The plan of solidarity in remittances, on top of a complex revenue system, is disjointed. There are too many taxes, too many exemptions, too many tables and brackets, and they are all products of political agendas set in motion by unseen powerful interest groups.

The time has come for real reform. It’s time to bring to the table the Libertarian proposal of a flat tax. It’s time to seriously consider a uniform income tax that is proportionate to a fixed sales and value-added tax, but at rates lower than they are now.

A flat tax is radically different to the present system of taxation; it is simple and transparent and does not create winners and losers based on arbitrary tax rates.

Since a flat tax would be lower, it stands to stimulate economic growth. Lower tax rates are more attractive to domestic and foreign investment.

A flat tax evens the landscape for different sectors of the economy by eliminating complexities and inefficiencies. By doing so, real economic growth would be realized; as opposed to the current industries that aren’t taxed enough and grow at a dizzying pace, while other industries are stuck due to high tax rates.

Note: the comments above are the opinion of Patricia Perez Hegg.