President Hipolito Mejia will begin a round of meetings next week intended to create consensus regarding the economic reform legislation pending in congress. Mejia will consult with commercial associations, labor unions, and civic organizations. ?I won?t make a definitive decision,? he said, ?without first hearing other opinions.? The centerpiece of the reforms being proposed by Mejia is an increase in the point-of-sale transfer tax, known as ITBI, which would rise to 12% in the first year and 14% in the second. Mejia described the current 8% ITBI as ?shameful,? and noted that Nicaragua – with a weaker economy – has an 18% ITBI. Under Mejia?s plan, the range of goods and services subject to ITBI taxation would be enlarged. In addition, a wholesale tax of 2% would be imposed, and taxes on alcohol and tobacco would almost double. Taxes on retail sales of vehicles and the purchase of luxury homes would be increased as well. Two sorts of compensatory measures are contemplated. Lower income families would be exempted (or compensated) in whole or in part by measures that have yet to be specified. Importantly, import duties would be reduced in both level and bracket from the current 0, 3, 5, 10, 15, 20, 25, 30, and 35, to 0, 3, 8, 14, and 20 per cent.
