The Rice Cartels Of Costa Rica. Why Tariffs and Price Fixing Do Not Fix Poverty.

Costa Rica is known internationally as having the ‘Pura Vida’ lifestyle and a low level of corruption. Tourists will, unfortunately, notice that all supermarkets have very high prices. Many of the expats will be familiar with the hilariously priced $8 tiny jars of Skippy peanut butter.

The fact of the matter is that Costa Rica heavily relies on food imports and the government heavily taxes everything. The local agriculture cannot sustain the rapidly growing population but Costa Rican protectionist laws are stuck in the past.  It is not just tasty luxury goods that are taxed, but basic staples are heavily taxed. Rice has tariffs of 35%, beans 30%, and milk at 65% just to name a few.

A small group elite families have deep roots within the government that allow them to take advantage of the system. The rice companies that belong to Corporación Arrocera (Conarroz) are the only entities allowed to import rice duty-free. Since rice is price controlled, these companies can only sell the rice at a maximum price. Imported rice is much lower than local rice, so these companies simply sell the cheap foreign rice at the fixed prices and pocket the rest. Since rice is such an important part of the working class’s diet, this gives Conarroz members a lot of power.

Good old Uncle Pelon.

It is no secret that foreign investment in Costa Rica has increased the prices dramatically. The unfortunate thing is all construction materials are also heavily taxed. Families that want to construct a simple home on a rural plot of land will have to pay nearly double in comparison to neighboring countries. For working class folk that make $400 a month, they would be lucky to own a shack of corrugated iron.

Some places are not so Pura Vida. Uruca, San Jose

Costa Rica is a country that has had extreme poverty for decades due to the lack of industry. The poverty has relatively remained the same since the 1990’s due to the extremely high cost of living for a developing country. Even Nicaraguans are starting to enjoy a similar standard of living even with earning less than half of the typical Tico. The promised intention of tariffs and price fixing was to take from the rich and give to the poor, but the exact opposite is happening in Costa Rica.

Interesting Links:

List of Import tariffs. Some of these percentages may shock you.

An interesting comparison of the food prices by various foreigners. By News.co.cr

A more thorough explanation of Costa Rica’s poverty. ‘Growth without Poverty Reduction: The Case of Costa Rica’. The Cato Institute

 

 

Situation Escalates At Panamanian Border. 300+ Venezuelans Left Stranded. All Foreigners Being Denied Renewals Of Tourist Visas.

 

In a recent article, a group of 89 Venezuelans were denied entry with the suspicion that they are working illegally. The toll has now reached 300+ Venezuelans.

The Panamanian government has made it official that they will not let anybody from any nationality renew their visas at the Costa Rican land border. It is still uncertain whether perpetual tourists can obtain reentry through the airports.

Official Tweet by Panamanian Authorities

It has also been confirmed that perpetual tourists from Canada, United States and Europe are being denied entry into the country. Local gringos from Boquete had confirmed that the border is not allowing them back into the country and panic is ensuing within online communites.

 

 

Over 89 Desperate Venezualans Stuck at Panama’s Paso Canoas Border – Xenophobia In Latin America

Due to the economic crisis, many Venezuelans are seeking refuge in the economically stable country of Panama. A bus load of 89+ Venezuelans were denied access to the country due to the suspicion that they are working illegally.

Venezuelans, as well as other Latin Americans, will live in the country as perpetual tourists and renew their tourist visa every 6 months at the Costa Rica border. Many cannot afford to apply for residence visas due to the high costs of obligatory lawyers and the Panamanian government’s bureaucracy.

With growing fears of increased violence and unemployment, Panamanians are becoming leery of allowing people to stay in the country on extended tourist visas. The government has also been discussing closing immigration programs like Crisol de Razas due to the recent outrage by Panamanian protesters. The immigration had previously been lax with renewing tourist visas since it was mainly being utilized by rich gringo retirees from Boquete.

One of the nicer hotels in the Paso Canoas border zone.

The entrance requirements for Panama is simply $500 in cash or in your bank account, a plane ticket going back to your country of citizenship, fingerprints and quite possibly they will want to see hotel reservations. Returning tourists will need to stay out of the country for 3 days, and many opt to sleep in the seedy hotels available within the border.

The Venezuelans had stayed the required 3 days out of the country, but apparently some were missing proof of their bank statements and/or flight tickets. After getting together the required paperwork, they were still denied under the suspicion that they were illegally working in the country. The governor of the province of Chiriquí, Hugo Méndez, announced that he will be working on a solution to accommodate the Venezuelans stuck in border limbo.

 

FATCA Crippling The Carribean Economy – Trump Needs To Dismantle It

 

The original intention of FATCA was to prevent overseas money laundering and tax evasion by the ultra wealthy. Unfortunately, the regulations have mostly impacted the finances of middle class Americans and banking institutions of developing countries.

Banks that fail to comply with FATCA regulations may be hit with a 30% on US based transactions. Many banks around the world have decided to turn their backs on American customers due to the bureaucratic headache.

The financial institutions of Caribbean nations cannot simply ignore FATCA since their economies are heavily invested in international finances. The regulations have caused capital to move away and has decreased the flow in international investments.

The United States have black listed 15 Caribbean nations as tax havens. Some US have cut off or restricted services to these countries because of this.

Antigua & Barbuda became the most recent nation to give into the demands of FATCA. All American owned bank accounts with over $50,000 will now be reported.

Kamla Persad Bissessa, a politician from Trinidad and Tobago, had written a letter by hand reminding Donald Trump to repeal FATCA.  Trump had made remarks about repealing FATCA, but we are left waiting to see whether or not he will deliver.

Senator Rand Paul previously introduced a bill to repeal FATCA, but was ultimately shut down by the Democrat dominated Senate. With the hypocritical two party system, we may never see such a bill come to life again.