Nica News Roundup (March 7)

323 days

March 7, 2019

Nicaragua

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In this edition:

Tax Reform Hits Family Budgets

The Tax Reform Bill approved on February 28 has had immediate effects on households nationwide, as families face price increases on most household goods and foodstuffs.

Some Nicaraguans documented price increases in their neighborhoods. For example, twitter user Karina Reynosa posted this sign, announcing that the price of tortillas in her neighborhood would go up to C$ 3.00, due to the increase in the price of corn.

In January, the Central Bank of Nicaragua reported that the cost of the basket of goods — a grouping of basic household necessities — was C$13,500.85 (about $396). By one estimate, this price will increase by 30%, to about C$17,000 ($518.61) as a result of the tax reform.

Such an increase will make a dire situation even worse. For instance, Nicaraguans who make minimum wage, regardless of economic sector, cannot afford the basket to begin with. Indeed, since September of last year, the minimum wage for an agricultural laborer is C$4,176.49 per month. That only covers about 32 percent of basket of goods at the original price, and 24 percent of it at the estimated price.

MITRAB Acuerdo Ministerial ALTB-01-03-18 del 01 marzo 2018 al 28 febrero 2019

The president of the Commission on Production, the Economy, and Budgeting of the National Assembly, Walmaro Gutierrez (FSLN) stated that the food staples would be exempt from paying the 15% Value Added Tax (VAT), including whole chickens and several cuts of beef (not specialty cuts). In an interview on Canal 13, Gutierrez stated that only manufactured goods would pay the VAT.

The 15% VAT will only be applied to consumer goods that are produced through an industrial process. There is only a few of those. All of the basic goods in the basket that all Nicaraguans need WILL NOT PAY VAT

However, Gutierrez does not acknowledge the fact that even if a chicken “is not produced through an industrial process”, the chickens that most Nicaraguans buy, particularly if they live in cities, eat processed chicken feed.

Chicken feed is taxed. According to Trinchera de la Noticia, Cargill, one of the biggest providers of animal feed products, announced that it would start adding the VAT to all animal feeds, as of March 2.

Gisella Canales, a personal finance specialist, indicated that several products that were tax exempted prior to the reform will now pay the VAT or the Impuesto Selectivo de Consumo (ISC), an selective excise tax. These products include vegetable oil, onions, potatoes, butter, bacon, certain cuts of meat, ribs, chicken breast, pork chops, refined sugar, toilet paper, toothpaste, and sanitary napkins.

Canales also queried her Twitter followers about their strategies to adjust to rising prices. Here are some of their responses:

  1. Do our shopping at the Mercado Oriental [traditionally, a place for bargain hunters in Managua]
  2. Buy only what we need and what is economical
  3. Eat moderately [“como la gente” is an idiom that roughly translates to eating with moderation]
  4. Make a list before shopping
  5. Cooking only once a day [Many Nicaraguan families cook twice or three times per day]
  6. Have cooked beans on hand always
  7. Share internet use and costs among neighbors
  8. Pray

Changing our purchasing habits. Reducing food portions. Planting a vegetable garden. Eating chicken only every other day. Not eating beef or pork. I think we’ll be looking sexy by Easter Week.

We won’t be buying chicken breast with wing. We’ll buy the half chicken because it has no VAT. Increase consumption of natural drinks, rather than sodas. Buy rice of less quality; we’ll go from 96/4 to 80/20. Buy coffee in the smaller bag. In sum, we’ll try to avoid paying IVA whenever possible.

We’ll do comparison shopping, to verify where we can find the cheapest prices, and we’ll see if they have discounts, or if the discounts offered really make a difference, when compared to the prices at the market.

Nicaraguans faced similar hardships in the 1980s, due in part to the US economic blockade against the Sandinista government.

 

Liberal Members of the Assembly Protest for Political Prisoners

Assemblymen and Women of the Partido Liberal Constitucionalista (PLC) staged a protest on the floor of the legislature. The parliamentarians, lead by Assembly Woman Maria Fernanda Flores, demanded the release of female political prisoners, as a way to commemorate International Women’s Day (March 8).

Flores is the wife of former President Arnoldo Aleman. Aleman is responsible for the Aleman-Ortega Pact, which opened the door for Daniel Ortega’s reelection. In 2003, he was convicted on charges of money laundering and embezzlement, and sentenced to 20 years house arrest. The sentence was overturned in 2009.

Flores has not played any role in the opposition movements against Ortega. This is the first, high profile act of civil disobedience she has participated in, since being spotted at some of the marches in Managua last year.

Flores and her colleagues were showed down by OrMu sympathizers in the gallery, as shown in this video.

The PLC has played no role in the negotiation processes between the Alianza and OrMu. The closest they have come is though the presence of Jose Pallais, who is a former Assemblyman for the PLC and served as vice minister of government and foreign affairs under Violeta Chamorro. Pallais is now a member of the Frente Amplio por la Democracia.

 

 

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